Global: FCA Implements Rules to Combat Greenwashing

The Financial Conduct Authority (FCA) is taking decisive action against greenwashing by introducing sustainability disclosure requirements and an investment labels regime.

Originally proposed a year ago, the FCA’s measures aim to enhance trust and transparency in sustainable investment products, combating misleading practices. Following industry feedback, the watchdog has now confirmed the implementation of these rules starting next year.

Beginning at the end of May, an anti-greenwashing rule will be enforced for all authorised firms to ensure that sustainability-related claims are fair, clear, and not misleading. Subsequently, in July, product labels will be introduced to provide investors with a clear understanding of how their money is utilized, based on transparent sustainability goals and criteria. Finally, in December, naming and marketing rules for asset managers will be enacted to prevent products from being described as having a positive impact on sustainability when they do not.

Sacha Sadan, Director of ESG at the FCA, emphasized the importance of these measures, stating, “We’re putting in place a simple, easy-to-understand regime so investors can judge whether funds meet their investment needs – this is a crucial step for consumer protection as sustainable investment grows in popularity. By improving trust in the sustainable investment market, the UK will be able to maintain its position at the forefront of sustainable finance and capture the benefits of being a leading international centre of investment.”