UK - FCA proposes new rules to tackle greenwashing

12/01/2023

The 25 of October, the Financial Conduct Authority (FCA) proposed a package of new measures including investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used.

The FCA proposes to introduce:

  • Sustainable investment product labels that will give consumers the confidence to choose the right products for them.

  • Restrictions on how certain sustainability-related terms – such as ‘ESG’, ‘green’ or ‘sustainable’ – can be used in product names and marketing for products which don’t qualify for the sustainable investment labels. 

  • Consumer-facing disclosures to help consumers understand the key sustainability-related features of an investment product. 

  • More detailed disclosures, suitable for institutional investors or retail investors that want to know more.

  • Requirements for distributors of products, such as investment platforms, to ensure that the labels and consumer-facing disclosures are accessible and clear to consumers.

The FCA is also stepping up its supervisory engagement on sustainable finance and enhancing its enforcement strategy.