Beware of “greenwashing” when investing your cash

Green investing has soared in popularity.

Sustainable investing continues to attract UK investors, with sustainable equities drawing £12.05 billion in 2024.

Additionally, 64 per cent of British consumers are willing to pay up to 10 per cent more for sustainably packaged foods and drinks.

This growing demand has led many listed companies to market themselves as environmentally responsible.

However, not all these claims are credible, with companies using greenwashing as a tactic.

Greenwashing is when a company presents itself or its investments as more sustainable than they truly are.

It is a growing issue, particularly among large multinationals keen to attract ESG-conscious investors without committing to meaningful change.

Common greenwashing tactics

Some companies use vague or unverified terms, such as “carbon neutral” or “eco-friendly”, without data to back them up.

Others promote minor environmental efforts while avoiding bigger questions.

Some avoid publishing sustainability data altogether, a tactic known as greenhushing.

Others make ambitious promises they have no clear plan to meet, often referred to as “greenwishing.”

These behaviours are designed to build trust and attract capital.

However, they can result in serious reputational damage and falling investor confidence once exposed.

Can ESG still deliver long-term value?

Responsible investing remains a valid strategy.

Done properly, it can support businesses that are working to reduce environmental harm and improve governance.

That said, green investments are not automatically ethical or profitable. Investors must look closely at how ESG claims are made and reported.

Checking for third-party certifications, measurable impact, and clear disclosures can help avoid being misled.

Do not be swayed by slogans. Speak to us today for transparent advice that puts your values and your money in the right place.