New measures aimed at improving the transparency of sustainable investment products and stamping out greenwashing have been announced by the UK’s financial watchdog.
The Financial Conduct Authority (FCA) is mandating new sustainability disclosure requirements following a consultation with a range of stakeholders, including industry, other regulators and consumer groups.
The new measures include a consumer-focused labelling regime, to support the UK’s position as a competitive centre for asset management and sustainable investment. The aim is to protect consumers by helping them to make more informed decisions when investing, and enhance the credibility of the sustainable investment market.
The FCA is also introducing an anti-greenwashing rule to ensure authorised firms’ sustainability-related claims are fair, clear and not misleading. They will have to publish product details to help investors understand what their money is being used for, based on clear sustainability goals and criteria, as well as naming and marketing requirements so that products cannot be described as having a positive impact on sustainability when they do not.
Sacha Sadan, director of environmental, social and governance at the FCA, said: “We’re putting in place a simple, easy to understand regime so investors can judge whether funds meet their investment needs – this is a crucial step for consumer protection as sustainable investment grows in popularity.
“By improving trust in the sustainable investment market, the UK will be able to maintain its position at the forefront of sustainable finance, and capture the benefits of being a leading international centre of investment.”
The new rules will come into effect from the 31 May 2024. Firms can use the investment labels from 31 July 2024, while the naming and marketing rules for asset managers come into effect from 2 December 2024.
An estimated .4trn of green-orientated assets are now being managed globally.
