Caroline Stevenson, a Partner at law firm Burness Paull, says the financial industry must do better in setting common standards to show that companies meet ESG (Environmental, Social and Governance) standards in the way they operate.
She is optimistic that the industry is on the right path - and excited by the possibilities of the Green FinTech Challenge, a competition to encourage green innovation and technology in the financial world.
The Challenge is run by the The Financial Conduct Authority (FCA), and Ms Stevenson is impressed that the industry regulator is stepping beyond its traditional role to encourage fresh thinking.
"The FCA’s focus on ESG has been evolving and that culminated with effectively a three-line whip from the Chancellor, saying the FCA must have regard to the Government's commitment to net zero by 2050 in all its activities.
"The FCA has created an ESG strategy and within that, the Green FinTech Challenge is supporting the role of finance in delivering a transition to a more sustainable economy. It's helping build trust in sustainable products and services by giving them a regulatory stamp of approval. In this instance, innovation and regulation go hand in hand."
To be successful, applicants to the Green FinTech Challenge had to show they could innovate to help the transition to a net zero economy, to be new or significantly different in the marketplace - and to offer a good prospect of identifiable benefit to consumers.
The successful applicants get the chance to use a range of FCA services, including the sandbox, an opportunity to test out new fintech ideas in a safe, regulated space.
Stevenson, Head of the Financial Services regulatory team at Burness Paull, explains that one of the key priorities of the Green FinTech Challenge is tackling greenwashing.
"One outcome the FCA is looking to achieve is to implement high-quality climate and sustainability-related disclosures to support accurate market pricing and help consumers choose sustainable investments and drive real value," she says. "So this is all about things like greenwashing - and trust and transparency."
Stevenson says greenwashing is a big concern in financial services.
"There is definitely a worry in the industry that greenwashing might be the next big mis-selling scandal. For example, people might have been induced to change their investing habits based on claims made in respect of that product, which transpire to be untrue or exaggerated in some way. If so, we could see a potential claim against companies who promoted those products in a misleading way.
"It's definitely one to watch but it's still quite difficult to measure different products. If there are more clear, aligned metrics, it will make it much easier for customers.
"That's another initiative by the FCA. It is looking to have labels attached to funds or investments, for example, so people know exactly what that financial product is. It's a bit like when you buy something from the supermarket, you have a clear way of seeing how many calories or how much sugar it has. We're going to have something similar on financial products in the future, which is really interesting."
And Stevenson concludes: "Given we're all striving towards sort of a greener, more sustainable planet, I think the Green FinTech Challenge is the first step to that - firms with sustainability at the heart of their mission statement.
"Watch this space, because I think it's likely that quite a few of these firms will do well. I'm excited to see what happens next."