FCA releases sustainability disclosure requirements and labelling regime
28 November 2023 UK
Image: Kalawin/stock.adobe.com
The FCA has confirmed a new set of sustainability disclosure requirements and labelling regime for sustainable investment products, aiming to reduce greenwashing and improve trust and transparency.
Sustainability was revealed as a consumer priority in the association’s Financial Lives survey, which found that the majority of adults in the UK would like to invest in a way that protects the environment and has a positive social impact.
An anti-greenwashing rule is being introduced to ensure that authorised firms’ sustainability-related claims are clear, fair and not misleading.
Additionally, naming and marketing requirements are being introduced to prevent products being falsely described as having a positive impact on sustainability.
Currently investors are not confident in the veracity of sustainability-related claims about investments.
This is exacerbated by inconsistency in the use of terms such as ‘green’ and ‘sustainable’, the association says. As a result, the FCA is implementing product labels based on sustainability goals and criteria to help investors to understand what their money is being used for.
More than 15,000 individuals participated in the testing of these measures, which were created with the engagement of industry stakeholders, regulators and consumer groups.
Sacha Sadan, director of ESG at the FCA, says: “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.”
Sustainability was revealed as a consumer priority in the association’s Financial Lives survey, which found that the majority of adults in the UK would like to invest in a way that protects the environment and has a positive social impact.
An anti-greenwashing rule is being introduced to ensure that authorised firms’ sustainability-related claims are clear, fair and not misleading.
Additionally, naming and marketing requirements are being introduced to prevent products being falsely described as having a positive impact on sustainability.
Currently investors are not confident in the veracity of sustainability-related claims about investments.
This is exacerbated by inconsistency in the use of terms such as ‘green’ and ‘sustainable’, the association says. As a result, the FCA is implementing product labels based on sustainability goals and criteria to help investors to understand what their money is being used for.
More than 15,000 individuals participated in the testing of these measures, which were created with the engagement of industry stakeholders, regulators and consumer groups.
Sacha Sadan, director of ESG at the FCA, says: “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.”
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