Before the anti-greenwashing regulation takes effect on 31 May, the FCA is providing guidance to assist the industry in meeting the requirements.
The new regulation aims to safeguard consumers by ensuring that sustainable products and services they purchase are accurately represented.
Results from the latest Financial Lives survey reveal significant consumer interest in sustainable finance – with 81% of adults surveyed expressing a desire for their investments to yield positive social or environmental impact in addition to financial return. This initiative supports the sector's long-term growth and competitiveness by helping businesses meet this demand and empowering consumers who invest in sustainability-related financial products to make well-informed choices.
The FCA is also seeking feedback on broadening the requirements for how sustainable investments are labeled and explained for portfolio managers, making it easier for consumers to choose. These managers oversee a pool of investments for clients, which can be in the form of standardized products or customized services.
The suggested labeling and Sustainability Disclosure Requirements (SDR) for portfolio managers closely resemble those introduced for asset managers in November 2023. They encompass:
- Product labels to aid consumer understanding of the utilization of their funds
- Naming and marketing requirements to ensure that products are only labeled as having positive effects on the environment and/or society when these claims are substantiated
Sacha Sadan, Director of Environmental, Social and Governance, FCA, remarked:
‘The release of the new anti-greenwashing guidelines and our plans to expand the Sustainability Disclosure Requirements and investment labeling framework mark important progress that upholds the UK’s leadership in sustainable investment. Our examples of good and bad anti-greenwashing practices will help companies effectively market their products. We are actively collaborating with the ASA and CMA to address greenwashing.
‘Consumers are interested in investing in products that have a positive impact on the environment and society. That's why we want to enhance market integrity and ensure that people can make well-informed financial decisions.’
