FCA sets new standards with anti-greenwashing rules

FCA sets new standards with anti-greenwashing rules

The Financial Conduct Authority (FCA) is enhancing its support for the FinTech industry by confirming new anti-greenwashing guidance ahead of its enforcement starting 31 May.

This initiative is part of a broader effort to fortify consumer trust and ensure the accurate representation of sustainable products and services in the financial market.

Designed to safeguard consumer interests, the new rule mandates that all sustainable finance products and services are precisely described, matching their real-world impact. This measure is set against the backdrop of growing consumer enthusiasm for sustainable finance. Indeed, the recent Financial Lives survey reveals a significant trend: 81% of adults express a preference for investments that yield financial returns while also contributing positively to society. The FCA’s guidelines are intended to nurture the sector’s growth and competitiveness by aligning business practices with consumer expectations, thus facilitating informed investment decisions in sustainability-linked financial products.

Furthering its commitment to transparency in sustainable investments, the FCA is now consulting on proposals to extend these stringent requirements to portfolio managers.

These professionals oversee collective investments which can be offered as either standard products or customised services tailored to individual consumer needs. The proposed extension includes the Sustainability Disclosure Requirements (SDR) and investment labelling, initially rolled out for asset managers in November 2023. These initiatives are designed to assist consumers in understanding the utilization of their funds and ensure marketing claims about positive environmental or societal impacts are verifiable.

Sacha Sadan, Director of Environmental, Social, and Governance at the FCA, emphasised the importance of these developments. “Confirming the new anti-greenwashing guidance and our proposals to extend the Sustainability Disclosure Requirements and investment labels regime are important milestones that maintain the UK’s place at the forefront of sustainable investment. Our good and poor practice anti-greenwashing examples will help firms market their products in the right way. We continue to work closely with the ASA and CMA to address greenwashing.

“Consumers care about investing in products that have a positive impact on the planet and people. That’s why we want to boost the integrity of the market and ensure people can make informed decisions with their money.”

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