In the UK, the Financial Conduct Authority (FCA) is nearing the end of a three-month consultation period on proposed measures to combat greenwashing, the practice of making exaggerated or misleading sustainability-related claims about investment products, which, in turn, erodes consumers’ trust in the market.
The consultation builds on the FCA’s Task Force on Climate-Related Financial Disclosures (TCFD)-aligned product- and entity-level disclosure rules, introduced in 2021, and forms part of the commitment made in the FCA Environmental, Social and Governance (ESG) Strategy and Business Plan to build trust and integrity in ESG-labelled products. More broadly, these measures seek to support the UK’s aim to achieve a net zero economy by 2050.
Respondents have until 25 January 2023 to respond to the FCA’s package of measures, which includes sustainable investment labels, disclosure requirements and the certainty that sustainability-related terms in the naming and marketing of products are proportionate to their sustainability profile. The FCA has also produced qualifying criteria that will ensure firms are indeed able to substantiate the claims they are making.
The three labels (“sustainable focus”, “sustainable improvers” and “sustainable impact”), together with the disclosure requirements, aim to give consumers the information they need to make informed choices about which products meet their preferences. While firms are free to decide whether or not they use such labels,...
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