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Tuesday, 12 December 2023

Anti-Greenwashing Guidance

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The UK's Financial Conduct Authority is proposing guidance for firms making sustainability claims in their promotional material, to avoid exaggerated and misleading messages. This includes situations where non-FCA authorised firms are getting promotions approved by FCA-authorised firms. The guidance will be finalised in Q1 2024, to take effect with the anti-greenwashing rule on 31 May 2024.

References to 'sustainability' must be:

  1. Correct and capable of substantiation;
  2. Clear and presented so as to be understood;
  3. Complete and not omit/hide key information;
  4. Take into account the full lifecycle of the product;
  5. Fair and meaningful in relation to any comparisons made.

The Anti-greenwashing rule provides:

ESG 4.3.1 R (1) This rule applies to a firm (whether it is undertaking sustainability in-scope business or not) which: 

(a) communicates with a client in the United Kingdom in relation to a product or service; or 

(b) communicates a financial promotion to, or approves a financial promotion for communication to, a person in the United Kingdom.

(2) A firm must ensure that any reference to the sustainability characteristics of a product or service is: 

(a) consistent with the sustainability characteristics of the product or service; and  

(b) fair, clear and not misleading.

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