Introduction: Not All That Glitters Is Green
As ethical investing becomes more popular, so do the claims.
From “climate-conscious portfolios” to “responsible ESG strategies,” it seems every investment manager is now committed to sustainability. But beneath the surface, these claims don’t always hold up. This is known as greenwashing—and it’s something trustees must be equipped to recognise and avoid.
At Epworth, we believe ethical investment should be built on substance, not slogans. In this guide, we explore what greenwashing looks like, why it’s a risk for faith-based charities, and how to tell the difference between authentic ethics and clever marketing.
What Is the definition of Greenwashing?
Greenwashing occurs when a company or investment manager exaggerates or misrepresents the environmental or ethical credentials of their products, funds, or practices.
In the investment world, this can look like:
- Vague claims with no supporting evidence
- Misleading fund names (e.g. “Sustainable Opportunities Fund” holding oil & gas stocks)
- Over-reliance on ESG ratings without transparency
- Using positive screening language while ignoring serious ethical concerns
- Advertising exclusions that are partial, outdated, or inconsistently applied
Why It Matters for Charity Trustees
As a trustee, you are legally responsible for acting in the best interests of your charity. That includes ensuring that your investment decisions:
- Reflect your charitable objectives
- Avoid reputational or ethical harm
- Are based on accurate, transparent information
If a fund claims to be ethical or sustainable—but lacks real integrity—your charity could be unwittingly exposed to industries or practices that conflict with your mission.
Worse still, it could undermine the trust of your donors, beneficiaries, and wider community.
Warning Signs of Greenwashing in Investment Marketing
Be wary of marketing that relies on:
Buzzwords Without Backing
Words like “green,” “sustainable,” “climate-smart,” and “responsible” mean little without clear definitions or data.
Selective Storytelling
Some managers highlight a few “hero” stocks while ignoring broader exposure to ethically problematic sectors.
Opaque Screening Policies
If you can’t find the specific ethical exclusions or tolerances being applied—or they’re buried in fine print—alarm bells should ring.
Exaggerated ESG Claims
A company may rank highly on ESG metrics while still being involved in arms manufacturing, fossil fuels, or exploitative supply chains.
What Trustees Should Look For Instead
Clarity on Ethical Policy
Look for published, detailed documents that outline:
- What is excluded (and why)
- What thresholds or tolerances are used (e.g. 5% revenue from alcohol)
- How decisions are made when companies fall into grey areas
Example: Epworth’s Ethical Investment Policy
Faith-Driven Frameworks
For Christian charities, alignment with Church teaching matters. Look for references to:
- Mensuram Bonam (for Catholic investors)
- JACEI guidance (for Methodist investors)
- Broader biblical and theological foundations
Transparency of Holdings
Can you see the fund’s actual investments? Are they regularly updated and easy to understand?
Independent Oversight
Is the ethical policy shaped by an independent committee or denominational body—or is it purely internal?
Track Record of Stewardship
Check voting history, engagement outcomes, and escalation policies. Real ethical investment involves real action—not just clean portfolios.
Explore Epworth’s Stewardship Reports
The Regulatory Context
Under the UK’s anti-greenwashing rule (effective 2024), FCA-authorised firms must ensure that:
- Sustainability claims are clear, fair, and not misleading
- Clients receive information they can trust and verify
- There is consistency between marketing materials, disclosures, and product content
Trustees should expect this same level of rigour—regardless of whether a fund carries an official label under the Sustainability Disclosure Requirements (SDR) regime.
Faithful Investment Requires Discernment
As with any other aspect of charity governance, ethical investing requires prayerful, practical discernment. Marketing language can be seductive—but it’s the underlying reality that matters.
As Paul writes in 1 Thessalonians 5:21:
“Test everything; hold fast to what is good.”
At Epworth, we welcome this scrutiny. We don’t hide behind jargon or vague labels. Instead, we offer trustees:
- Full transparency
- Clear ethical policies
- Meaningful engagement
- Values that are lived—not just claimed
Conclusion: Invest With Integrity, Not Illusion
Greenwashing is not just a marketing problem—it’s a governance risk. As a trustee, your job is to ask the hard questions, cut through the gloss, and ensure your investments truly reflect your values.
Want help reviewing your current fund or manager? We offer ethical portfolio reviews tailored for churches and charities.
Speak to our team or explore our ethically managed funds built for faith-based investors.