FCA is consulting on new rules to tackle greenwashing. Following its commitment in its ESG strategy and business plan, FCA is now addressing the concerns that the increasing exaggerated, misleading or unsubstantiated claims about ESG credentials are damaging confidence in “green” products.
Its consultation:
- will create a set of labels for products – there will be three categories – sustainable focus, sustainable improvers and sustainable impact;
- restricts the use of key terms such as “ESG”, “green” or “sustainable” in relation to products that do not meet the labelling criteria;
- introduces a general anti-greenwashing rule;
- suggests consumer-facing disclosures to help customers understand the key sustainability-related features of an investment product as well as more detailed disclosures for institutional investors, or retail investors wanting to know more; and
- will require distributors to ensure that labels and customer-facing disclosures are accessible and clear.
FCA is also looking to check how firms have responded to its Dear Chair letter, which it sent to authorised fund managers last summer.
Consultation closes on 25 January 2023 with final rules planned by the end of H1 2023.