FCA confirms anti-greenwashing guidance and proposes extending sustainability framework & FG24/3: Finalised non-handbook guidance on the anti-greenwashing rule
Summary
The FCA have released finalised guidance on its anti-greenwashing rule (FG24/3), which is set to come into effect on 31 May 2024. The new rule has been implemented to protect consumers by ensuring sustainable products and services are accurately described to allow consumers to make an informed decision.
The FCA state there has been significant consumer interest in sustainable finance, and the FCA see the new anti-greenwashing rule as supporting the long-term growth and competitiveness of the sustainable finance sector.
The anti-greenwashing rule had been previously introduced as part of the wider Sustainability Disclosure Requirements (SDR) and investment labels policy statement (PS23/16) from November last year. In the formalised guidance, the FCA have confirmed the rule applies when a firm either communicates with clients in the UK in relation to a product or service or communicates a financial promotion (or approves a financial promotion for communication) to a person in the UK.
The FCA, through its anti-greenwashing rule, expect firms’ sustainability references to be:
- correct and capable of being substantiated.
- clear and presented in a way that can be understood.
- complete – they should not omit or hide important information and should consider the full life cycle of the product or service.
- fair and meaningful where comparisons to other products or services are made.
The FCA is also consulting on extending the requirements on how sustainable investments are labelled and explained to portfolio managers. The proposed labelling and Sustainability Disclosure Requirements (SDR) include:
- product labels to help consumers understand what their money is being used for.
- naming and marketing requirements so products can only be described as having positive outcomes on the environment and/or society when those claims can be backed up.
Thistle can assist your firm regarding the anti-greenwashing rule in a number of ways, from providing support and guidance in your firm’s implementation of the new requirements, to ongoing support with your financial promotions and communications with consumers.
Links: https://www.fca.org.uk/news/press-releases/fca-confirms-anti-greenwashing-guidance-and-proposes-extending-sustainability-framework & https://www.fca.org.uk/publications/finalised-guidance/fg24-3-finalised-non-handbook-guidance-anti-greenwashing-rule