This is especially true when it comes to claims around sustainability. We recently joined forces with Ethical Consumer to look at how customers’ expectations of their Individual Savings Accounts (ISAs) matched up to their financial providers’ environmental standards.

We hope you find this article interesting, but keep in mind that it’s not financial advice or a personal recommendation. You should make your decisions on what’s best for you and consider financial advice if you’re not sure.

We asked around 2,000 ISA holders all about sustainable or ‘green’ ISAs. Here are the top four things that we learned.

Some ISAs might not be as ‘green’ as people think

The majority of people that consider themselves to be ‘green’ savers or investors actually have their money with providers ranked as ‘worst’ for the environment by Ethical Consumer magazine.

Providers of cash savings and stocks and shares ISAs are regularly analysed by Ethical Consumer on a number of environmental issues.  These include those that invest in harmful sectors such as fossil fuel extraction or deforestation. Each provider is given a rating from ‘best’ to ‘worst’.

Our research shows that 55% of stocks and shares ISA owners incorrectly think their investment is green. However, they are in fact banking with a provider that is classified as 'worst' by Ethical Consumer.

There’s also evidence of greenwashing in savings accounts. Half of cash ISA holders with a ‘worst’ provider think that their money is in a green ISA. Furthermore, 44% say they were influenced to choose their cash ISA based on these providers’ perceived sustainable credentials.

ISA holders don’t want to invest in fossil fuels

Our research has shown that many UK consumers have strong environmental values. Nearly half (47%) of people we asked believe that banks should not be investing in fossil fuel expansion. For 18–34-year-olds, this figure rises to an impressive 57%.

Nearly half of consumers (49%) also don’t believe that a fund or savings account can be classed as ‘sustainable’ if it includes fossil fuel companies – even those that also invest in renewables.

Ruairidh Fraser, writer and researcher at Ethical Consumer explains: “It’s crucial that consumers look beyond the ‘sustainable’ branding of a particular fund, and instead demand that providers withdraw fossil fuel investments from their whole portfolios."

There’s a continued lack of transparency

Despite valuing sustainability, the majority of savers and investors (55%) don’t know if their money is being used in an environmentally friendly way by their ISA provider. The findings suggests that banks aren't being honest and up-front about how they're using people's money.

“These findings demonstrate the worrying truth about how well-intentioned consumers are being misled about how their money is being invested,” explains Roger Hattam, director of retail banking at Triodos Bank UK. “In an industry dominated by opaque sustainability marketing, we have long advocated for much higher transparency.”

New anti-greenwashing rules will be welcomed

UK savers and investors are keenly aware of and cautious about greenwashing. 59% say they are concerned about this in the financial services industry.

"It’s good to see that public awareness around greenwashing is increasing, and savers are rightly sceptical about financial providers’ sustainability claims. This makes it all the more shocking that so many savers are still being wilfully misled by companies that continue to profit from environmentally destructive investments,” adds Ethical Consumer’s Ruairidh.

Yet only 10% of consumers are aware of upcoming new anti-greenwashing rules from financial regulator the Financial Conduct Authority (FCA). These rules will mean that banks and financial providers can’t use terms like “fossil fuel free”, “green” and “sustainable” unless they can back it up.

Once told about the rules, two-thirds of people (66%) said that they think the new rules are needed and will be helpful to consumers. Over half (54%) said that they would be motivated to switch financial providers if they knew that their current bank had broken the anti-greenwashing rules – a figure that rises to 61% of consumers aged 18-54.

“We agree that the upcoming FCA anti-greenwashing rules are so desperately needed,” comments Roger. “There are millions of consumers wanting their money to align with their values, but this is not yet matched with real industry commitment to clearly signpost what causes their money is actually supporting.”