The UK’s Financial Conduct Authority (FCA) is set to host an international operational forum to develop strategies aimed at combating the growing issue of greenwashing within financial services.
The “Greenwashing TechSprint” is part of the Global Financial Innovation Network, a cross-border regulatory sandbox designed for firms testing innovative financial products, services, or business models across multiple jurisdictions.
Utilizing the FCA’s Digital Sandbox, the TechSprint will bring together international regulators, firms, and innovators to address the increasing number of investment products marketed as ‘green’ or making broader sustainability claims.
Misleading, exaggerated, or unsubstantiated claims regarding Environmental, Social, and Governance (ESG) credentials undermine consumer confidence in these products. The FCA aims to ensure that consumers and firms can trust that products possess the sustainability features they advertise.
In October, the FCA proposed a series of new measures, including investment product sustainability labels and regulations on the usage of terms like ‘ESG,’ ‘green,’ and ‘sustainable.’ The outcomes from the TechSprint will inform and shape these forthcoming rules.
The UK watchdog is among 13 international regulators participating in the TechSprint and has invited all UK-based firms interested in joining to apply starting April 17, 2023. The application period will be open for four weeks.
The TechSprint will commence on June 5 and will run for three months, culminating in a showcase day in September 2023.