Sustainable investing
A range of sustainable investment funds
Capital at risk. The value of investments can fall as well as rise, and you may get less than the full amount you invest.
As someone who saves money with Cushon, you have the option to invest in a range of sustainable investment funds, available through our platform. But what does it actually mean for an investment to be ‘sustainable’? And what rules are in place to make sure they do what they claim?
What is sustainable investing?
Unlike any old investments, sustainable investments tend to have a purpose beyond just making money. As well as grow your savings, they usually aim to have some sort of positive impact. That could be on the environment, societies or the governance of companies (referred to as ESG factors). In other words, they try to do some good.
Does sustainable investing go by any other names?
Over the decades, sustainable investing has been called all sorts of things, usually depending on the investment company talking about it. There have been ethical, responsible, sustainable, impact, green and more – each with its own ever-changing definition and aim.
A bit confusing, right? And to make matters worse, some companies would say they offer a sustainable investment fund without actually investing sustainably. That’s called greenwashing. But that’s all changing…
New official labels for sustainable investment funds
In the UK, the Financial Conduct Authority (FCA) is responsible for keeping financial services honest and fair. And now, to clear up confusion around sustainable investing and make sure companies don’t stretch the truth about what they claim to be ‘sustainable’, the FCA have introduced a set of official, specific labels.
We think this is great news. It’s helping to stamp out greenwashing, make things clearer, and give you confidence in the investments you put your money into.
Funds investing in companies that are environmentally and/or socially sustainable.
Funds that invest in companies with the potential to improve their environmental and/or social sustainability over time.
Funds investing in companies that aim to achieve a positive, measurable impact on the environment and/or society.
Funds investing in a mix of companies that are already sustainable, have the potential to become more sustainable, or aim to achieve a positive impact.
From now on, if you don’t see one of these labels on an investment fund’s fact sheet, that’s because it hasn’t earned the right to use one or it’s a fund that operates outside of the UK.
To achieve a label, investment funds must have a sustainability-related objective in addition to a financial one.
All labelled funds must produce detailed disclosures to help investors understand their approach to sustainability.
Not all funds that have sustainability characteristics will have one of the four labels. But if their name reflects those characteristics, they are required to provide the same consumer disclosures as labelled funds.
There are strict limits on non-labelled funds using terms like ‘climate’.
We don’t control these funds, but we are distributors of them and some of them are climate focused.
As we’re providing you access to these funds, we have a duty to make sure you’re aware of these changes and what these labels mean.
If you’re investing in a fund outside of the UK, it won’t be subject to the labels above. The FCA is working to include overseas funds in the future but, until they do, these funds won’t be eligible for a label.
As with all investments, sustainable investments can go down as well as up in value. If you’re unsure what’s right for you, we recommend you speak to an independent financial advisor. We can’t give you specific advice but will support you with general guidance.
Further reading for full transparency
If you’re interested in all the really geeky details about what makes us sustainable, you can also see our Sustainability Policy for things like our products, offices and teams. You can also read more about Sustainable investment labels and anti-greenwashing.
