The UK regulator, the Financial Conduct Authority (FCA), wants to protect customers from greenwashing to enable them to make informed decisions that align with their sustainability preferences.

 

What is greenwashing? 

It’s when a financial service provider or other company ​​makes a false claim about their products being socially responsible and environmentally sound. The term environmental, social, and governance (ESG) is usually used as a stamp of authenticity to show that an investment is more socially responsible.

These new anti-greenwashing regulations take effect on 31 May 2024, and the good news is that they make it harder for financial service providers to greenwash the investments they offer.

That’s because they clarify to firms, including Moneybox, that sustainability claims about their products and services (labelling investments as ESG for example) must be backed up, fair, clear, and not misleading.

 

How does this affect you and your investments?

Following a review of the investments we offer, we identified just one area that we needed to review.

Under the new regulations, for a fund to be labelled as ESG it must have at least 70% of its holdings in ESG investments. As a result, the Cautious ESG Starting Option that you’re invested in is no longer classified as ESG – because it holds 40% of your money in cash (which isn’t an ESG investment). All other Moneybox ESG Starting Options are unaffected, as are other funds in our range.

You can review your investments and the ESG funds we offer, and customise your allocations to align with your goals. Just make sure you update your app first if you’re not on the latest version.

Be sure to check the risk profiles of the different funds we offer before customising your investments – and be aware that customising your investments will change your risk profile.

Please note that investment managers of funds domiciled in the UK will have until 2 December 2024 to confirm to the FCA whether their funds meet the Sustainability Disclosure Regulations (SDR) coming into effect on 31 July.

Once the relevant fund manager notifies us, we shall review and update the ESG classification as required.

Funds not domiciled in the UK are subject to the European Union’s Sustainable Finance Disclosure Regulation (SFDR), which came into force in March 2021.

As part of complying with these anti-greenwashing rules Moneybox has classified funds as ESG where they meet the following:

  • Funds that promote environmental or social characteristics
  • Funds that have sustainable investment as their objective

 

All investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.