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FCA to clamp down on greenwashing

In a bid to clamp down on greenwashing, the Financial Conduct Authority (FCA) is proposing a package of new measures including investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used.

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FCA to clamp down on greenwashing

Editorial

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The watchdog says it wants to ensure that consumers and firms can trust that products have the sustainability characteristics they claim to have.

Sacha Sadan, the FCA’s director of environment social and governance, comments: "Greenwashing misleads consumers and erodes trust in all ESG products. Consumers must be confident when products claim to be sustainable that they actually are. Our proposed rules will help consumers and firms build trust in this sector."

Alongside the introduction of three categories of certified 'sustainability' labels for investment products, the FCA is also proposing a more general anti-greenwashing rule covering all regulated firms in order to help avoid misleading marketing of products.

Initially focusing on UK-based funds and portfolio management, consultation on the proposals is open until 25 January 2023, with final rules published by the end of the first half of 2023.

The FCA says it intends to follow with a consultation on expanding the scope to overseas products, and further consultations over time to extend the scope and content of the regime.

Finextra recently announced its fifth Sustainable Finance Live conference and hackathon, scheduled to take place on 29 November. For more information and to register for this event, please visit the event page here.

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