How to Know If Your Investments Are Truly Green or Just Greenwashed

Neil Dissanayake
May 24
3 min read

Updated: May 26

As an eco-conscious professional, you want your investments to reflect your values—supporting sustainability rather than contributing to climate harm. But with so many funds now branded as "green," "sustainable," or "ESG," how can you tell which ones are genuine and which are just greenwashing?

The UK’s Financial Conduct Authority (FCA) has introduced new rules to tackle this issue, but investors must still be vigilant. Here’s how to navigate the landscape and ensure your money is making a real difference — whether you're managing your own personal financial planning or working with a financial planning advisor.

1. What Is Greenwashing — And Why Should You Care?

Greenwashing occurs when companies or funds exaggerate their environmental credentials to appear more sustainable than they really are. Think of it as an "eco-friendly" label slapped on a product that’s anything but.

For example:

A fund might claim to invest in clean energy while still holding shares in fossil fuel giants.
A company might highlight a small recycling initiative while ignoring its massive carbon footprint.

The risk? You could unknowingly support harmful industries while believing you’re doing good. Recent cases, like Deutsche Bank’s DWS paying a $19 million fine for misleading ESG claims, show regulators are cracking down — but greenwashing remains widespread.

2. The FCA’s New Sustainability Labels: A Game Changer

To help investors like you, the FCA has introduced four sustainability labels, which became effective from July 2024:

Sustainability Focus – Invests mainly in assets meeting strict environmental or social criteria.
Sustainability Improvers – Targets assets improving their sustainability over time.
Sustainability Impact – Aims for measurable positive environmental or social outcomes.
Sustainability Mixed Goals – Combines elements of the above.

These labels make it easier to identify genuinely sustainable funds — but you should still verify their holdings.

Key Takeaway: Look for funds with these labels — they’ve been vetted for credible sustainability claims.

3. How to Spot Greenwashing in Your Portfolio

Even with the FCA’s new rules, some funds may still stretch the truth. Here’s what to watch for:

✅ Check the FCA’s anti-greenwashing rule: All sustainability claims must be clear, fair, and not misleading.

✅ Look beyond the label: Does the fund disclose its actual holdings? Exchange-traded funds (ETFs) are particularly transparent — you can easily check every company they invest in.

✅ Verify third-party certifications: Reliable frameworks like the Global Reporting Initiative (GRI) or UN Sustainable Development Goals (SDGs) add credibility.

🚩 Red flags:

Vague claims ("eco-friendly" without specifics).
Overemphasis on minor green initiatives while ignoring bigger harms.
No transparency about where your money is really going.

4. Where to Find Genuinely Sustainable Funds

A great resource for researching sustainable investments is the Fund EcoMarket, a UK-based database that helps filter funds by sustainability criteria, including those with FCA labels.

For those considering retirement financial planning, sustainable ETFs and green bonds can be excellent long-term options, offering both transparency and alignment with ESG goals.

5. What You Can Do Next

Review your current investments — Do they have an FCA sustainability label? If not, dig deeper.
Consider ETFs for transparency — Their holdings are fully disclosed, making greenwashing harder.
Consult an investment adviser or a financial planning coach – advisers make decisions for you and often charge as a % of assets you hold with them, which can create bias. Coaches (like Planet Positive Planning) instead guide you to make your own decisions — no product sales, no hidden agenda, just independent, transparent support.

Final Thought: Your Money Has Power

Sustainable investing isn’t just about returns — it’s about ensuring your wealth supports a liveable planet. With the FCA’s new rules and tools like ETFs and Fund EcoMarket, you now have better ways to cut through the greenwashing and invest with confidence.

Need Help Understanding Your Options?

While I can’t recommend specific funds, I’m happy to help you evaluate them. If you have questions about ESG investing or retirement financial planning, get in touch — I’d love to help you make informed choices.

Further Reading:

Your investments can drive real change — make sure they’re doing what you expect!