According to a Boring Money study, even after the labels, which are part of the Sustainability Disclosure Requirements, were explained to consumers, a quarter said they were still unsure as to which label best aligned with their requirements for a sustainable fund.
Even among more confident “savvy” investors, around 20% were left puzzled, the firm found.
Of the four incoming labels, consumers singled out ‘Sustainability Improvers’ as the least popular.
Boring Money CEO Holly Mackay said: “We have been tracking consumer appetite for sustainable funds for years. We saw a spike during the pandemic, followed by a drop in appetite and growing concern about greenwashing.
“Despite some signs of a recovery, it is clear that even with these new proposed labels, firms will have to do a lot more work around communicating what these products actually do, and what the intent and objective of the fund actually is.”
The concept of transition has been the hardest for consumers to grasp, with many questioning the presence of oil companies in sustainable portfolios, Mackay explained.
Although consumer understanding is improving, she added the Improvers label alone is “a bit of a damp squib”, and the onus of ensuring products are understood will lie with firms.
