The growing interest in sustainable finance comes with a potential downside: misleading claims. The Malta Financial Services Authority (MFSA) is tackling this by educating the public on both sustainable finance and how to spot "greenwashing."

Sustainable finance aims to balance economic growth with environmental and social good. It does this by steering money towards activities that do not harm the environment, society, or the economy in the long run. Greenwashing, on the other hand, is when companies pretend to be eco-friendly when they're not.

"We want to empower people to make smart financial choices that are also good for the environment," said Sarah Pulis, Head of Conduct Supervision at MFSA. "Greenwashing can be confusing, so it's important to be able to tell what's genuinely green."

Examples of sustainable financial products include bonds that fund eco-friendly projects, investment funds focused on sustainable businesses, insurance products that align with environmental, social, and governance (ESG) goals, and loans that support renewable energy or water conservation.

The MFSA offers some key steps for consumers to ensure their investments are both financially sound and environmentally friendly.

First, question the sustainability claims financial institutions make and ask for clear details about their practices. Second, do your own research on how they measure environmental impact. Finally, look for initiatives that have been carefully checked and meet strict sustainability standards – this can make a big difference to the outcome of your investment. Financial advisors should also make sure the products they recommend match their clients' values and preferences for sustainability.

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

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Source: MFSA