In a survey carried out by KPMG in September 2023, over half of the UK consumers asked said that they would stop buying from a company if they were found to have been misleading in their sustainability claims.
In November 2023 the Financial Conduct Authority (FCA) finalised the Sustainability Disclosure Requirements (SDR) and investment labels regime - a raft of measures to improve trust in and transparency of investment products and minimise greenwashing.
The anti-greenwashing rule is a part of that package and the FCA hope that it will clarify that sustainability-related claims about products and services must be fair, clear and not misleading. It provides a means by which the regulator can challenge firms who may be suspected of greenwashing.
The consultation on general guidance to support the implementation of that closed in January and the anti-greenwashing rule came into effect from 31 May 2024.
The guidance makes clear that anti-greenwashing rule will apply when a firm:
- Communicates with clients in the UK in relation to a product or service.
- Communicates or approves a financial promotion to a person in the UK.
The rule applies with respect to references to the sustainability characteristics (environmental and/or social characteristics) of a product/service and it applies in relation to financial products/services which FCA-authorised firms make available for clients in the UK, including financial promotions that authorised firms communicate/approve for unauthorised persons (including for overseas products/services where the promotion is approved in the UK).
In practice, the effect of the anti-greenwashing rule and other applicable rules means that sustainability references should be:
- Correct and capable of being substantiated.
- Clear and presented in a way that can be understood.
- Complete - they should not omit or hide important information and should consider the full life cycle of the product or service.
And that comparisons to other products or services should be fair and meaningful.
The recently published guidance will help firms understand and comply with the anti-greenwashing rule, which is intended to complement and be consistent with existing rules and expectations.
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