The Financial Conduct Authority (FCA) is taking action against greenwashing by establishing sustainability disclosure requirements and an investment labels regime.
The UK regulator initially proposed a series of measures aimed at enhancing the trust and transparency of sustainable investment products and reducing instances of greenwashing a year ago. Following feedback from the industry, it has now confirmed that these new rules will take effect next year.
Starting at the end of May, an anti-greenwashing rule will mandate that all authorized firms ensure their sustainability-related claims are fair, clear, and not misleading. In July, product labels will be introduced to help investors better understand how their money is being utilized, based on specific sustainability goals and criteria. Then, in December, new naming and marketing regulations for asset managers will prevent products from being labeled as having a positive sustainability impact if they do not.
Sacha Sadan, director of ESG at the FCA, stated, “We’re implementing a straightforward regime to help investors determine whether funds meet their investment needs. This is a crucial step for consumer protection as sustainable investment becomes more popular.”
He added, “By fostering trust in the sustainable investment market, the UK can maintain its leadership position in sustainable finance and reap the benefits of being a premier international investment hub.”