FCA confirms anti-greenwashing guidance and proposes extending sustainability framework

The new rule is designed to protect consumers by ensuring sustainable products and services they are sold are accurately described.

Results from the latest Financial Lives survey[1] shows significant consumer interest in sustainable finance as 81% of adults surveyed would like their investments to do some good as well as provide a financial return. This work supports the long-term growth and competitiveness of the sector by helping businesses meet this demand and ensuring consumers who invest in sustainability-related financial products can make informed decisions.

The FCA is also consulting on extending to portfolio managers the requirements on how sustainable investments are labelled and explained, making consumer choice easier. These are firms that manage a group of investments for consumers, which can either be offered as standardised products or tailored services.  
 
The proposed labelling and Sustainability Disclosure Requirements (SDR) for portfolio managers largely mirror those introduced for asset managers in November 2023. They 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

Sacha Sadan, Director of Environmental, Social and Governance, FCA, said:

‘Confirming the new anti-greenwashing guidance and our proposals to extend the Sustainability Disclosure Requirements and investment labels regime are important milestones that maintain the UK’s place at the forefront of sustainable investment. Our good and poor practice anti-greenwashing examples will help firms market their products in the right way. We continue to work closely with the ASA and CMA to address greenwashing.

‘Consumers care about investing in products that have a positive impact on the planet and people. That’s why we want to boost the integrity of the market and ensure people can make informed decisions with their money.’

Notes to editors

1. Read CP24/8 proposing to extend the SDR regime to portfolio management[2].
2. Read FG24/3: Finalised non-handbook guidance on the anti-greenwashing rule[3].
3. In November 2023 the FCA finalised the Sustainability Disclosure Requirements and investment labels regime[4], a substantial package of measures to improve trust and transparency of investment products and minimise greenwashing.
4. The anti-greenwashing rule will come into effect from 31 May 2024. UK-based fund managers can use the investment labels from 31 July 2024. The naming and marketing rules for UK-based fund managers come into effect from 2 December 2024.
5. The FCA, the Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA) work closely together to tackle greenwashing. While there are separate regulatory responsibilities there are some important areas that overlap. Where appropriate, we will continue to collaborate with the CMA and ASA to address greenwashing. 
6. Find out more information about the FCA[5].