Beware Of Greenwashing: Your Guide To Truly Sustainable Finance

As the world shifts towards greater demand for sustainable finance, the importance of distinguishing genuine sustainability from deceptive practices becomes increasingly vital. Greenwashing occurs when companies falsely present themselves or their products as environmentally friendly. It’s a deceptive practice that capitalises on the growing demand for sustainable options. 

Enter the Malta Financial Services Authority (MFSA), with a campaign to educate the public on sustainable finance and uncover the deception of greenwashing.

Here are some practical steps to help you navigate the murky waters of sustainable finance and greenwashing:

Scrutinise sustainability claims

When a financial institution labels a product or service as “green” or “sustainable,” don’t take it at face value. Dig deeper. Read the fine print in prospectuses, annual reports, and product documentation and ask financial institutions about their sustainability practices or ask your financial advisor for more details on the product being offered. Greenwashing often tries to disguise itself with eco-buzzwords and flashy visuals. Always have a critical eye! Just because an entity has a leaf on its logo, does not mean that it is sustainable.

Demand accountability

Insist on clear and detailed information from financial institutions regarding their sustainability practices. Look for substantiated claims backed by evidence. Seek out entities that willingly share information about their investments, practices, and criteria for sustainability. If an entity is hesitant to spill its eco-friendly beans, this might be a red flag for potential greenwashing attempts.

Support reputable initiatives

Align your investment choices with reputable and transparent projects. Support initiatives that have undergone rigorous scrutiny and adhere to strict sustainability standards.

Stay educated

Sustainable finance evolves rapidly. Stay abreast of developments by keeping an eye on industry news. Knowledge is your best armour against greenwashing. 

Determine your personal sustainability priorities

Define what sustainability means to you and let that be your compass. If an entity’s value aligns with yours, reward it with your business or your investment. 

For more information on sustainable financial products and greenwashing, visit the MFSA campaign website here.