FCA Issues Anti-Greenwashing Guidance, Proposes Expansion of Sustainability Framework

The Financial Conduct Authority (FCA) is stepping up its fight against greenwashing with new guidance and an expanded sustainability framework. The anti-greenwashing rule, set to take effect on May 31, aims to protect consumers by ensuring that sustainable products and services are accurately described. This initiative aligns with significant consumer interest in sustainable finance, as highlighted by the FCA’s Financial Lives survey, which found that 81% of adults want their investments to contribute positively to society while yielding financial returns.

In response to this demand, the FCA is proposing to extend sustainability requirements to portfolio managers, enhancing transparency around sustainable investments. This extension mirrors the Sustainability Disclosure Requirements (SDR) introduced for asset managers in November 2023. Key components include product labels that clarify how funds are used, and marketing rules ensuring that environmental and social outcome claims are substantiated.

Sacha Sadan, Director of ESG at the FCA, emphasized the importance of the new anti-greenwashing guidance, stating that it helps position the UK as a leader in sustainable investment. He highlighted the FCA’s collaboration with the Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA) to combat greenwashing and bolster market integrity.