FCA plans crackdown on greenwashing

In a bid to clamp down on greenwashing, the Financial Conduct Authority (FCA) is proposing 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 is proposing to introduce: * Sustainable investment product labels that will give consumers the confidence to choose the right products for them. There will be three categories – including one for products improving their sustainability over time – underpinned by objective criteria.? * 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. It is also proposing a more general anti-greenwashing rule covering all regulated firms. This will help avoid misleading marketing of products.? * Consumer-facing disclosures to help consumers understand the key sustainability-related features of an investment product – this includes disclosing investments that a consumer may not expect to be held in the 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. This includes checking how firms have responded to the expectations set out in the?Dear Chair letter?issued to authorised fund managers in July 2021. Standards are evolving in the UK the US and the EU and asset managers need to take careful note and engage with regulatory consultations. #sustainability #marketing #investments Mourant

The Financial Conduct Authority has finally announced new actions to regulate and prevent greenwashing ?? And it couldn’t come soon enough. Until now, terms like ‘green’ and ‘ESG’ could be slapped on anything. With sustainability becoming a vital criteria for consumers — it has been a surefire way to attract investment. But without clear rules on what qualified you to use these terms — they risked becoming essentially meaningless. Preventing greenwashing at an investment level is a step in the right direction.? Investors will be less likely to back businesses that greenwash, encouraging them to take real action and directing more money towards the companies that factually value sustainability. But it’s only half of the picture — this is a complex ecosystem with many contributing factors, consumer intent being a big one. Ultimately, investors are looking for a return and will follow the money.? And if consumers continue to buy from polluting businesses, those companies will face little pressure to change. We as consumers, simply need to continue voting with our wallets.

"Greenwashing misleads consumers and erodes trust in all ESG products. Consumers must be confident when products claim to be sustainable that they actually are." The FCA’s ESG director, Sacha Sadan We should eliminate the acronym ESG from that sentence. It should apply to all products and services. The answer to helping customers and clients make informed decisions (when it comes to the consequences of their choices on people and the planet) is NOT to lie to them. We live in an increasingly transparent world where people expect and deserve businesses to act responsibly, accountably, and to be transparent. It's not rocket science. Some companies are seeing an increase in customer demand for more sustainable and ethical products and services as a way to tailor their messaging...without improving their products and services for Good. This isn't ok! Well done to THE FINANCIAL CONDUCT AUTHORITY for highlighting the issue and clamping down. More legislation and regulation to come I suspect. #betterbusiness #fca #betterfuture #authenticity #leadership #transparency

We are pleased to see progress by the FCA on greenwashing, with the release of consultation paper CP22/20 - Sustainability Disclosure Requirements (SDR) and investment labels – October 2022 (https://lnkd.in/e549sC3C). The incoming requirements will better help clients meet their required investment outcomes and responsible investing preferences. Giving more confidence to wealth managers and financial advisers that solutions are ‘genuine’, with *genuine* intentionality. We have three dedicated responsible investing ranges, as well as full bespoke capabilities to align with individual client preferences on responsible investing. This is ALL very much aligned with our overall investment philosophy of long-term, high conviction investing. Please feel free to reach out if you would like to speak with me or my team around this.

ESG funds are hugely popular, yet investors are currently basing their investment decisions on labels which hold less meaning than “organic” stamped on a bag of lettuce. #Greenwashing of investment funds will soon be regulated by the Financial Conduct Authority (FCA), according to an announcement today (link to announcement in comments ????). From mid-2023 investment managers won’t be able to haphazardly throw around terms like “ESG”, “green” or “sustainable” anymore. The FCA has proposed three clearly defined, consumer-friendly #ESG investment categories, for #funds which: ?? hold exclusively sustainable assets ?? encourage their holdings to become more sustainable ?? are focused on having a positive, real-world impact The FCA is also proposing a more general anti-greenwashing rule covering all regulated firms, guidance sorely needed by financial institutions. With ever increasing consumer demand for ESG action and products, and rules and regulations in constant flux, organisations are struggling to keep up. Luckily, there are #technology solutions on the ServiceNow platform which can help with that, link in comments if you’d like to find out more ????.?

And good to see the FCA propose new rules to counter risk of 'greenwashing'. https://lnkd.in/erE9f2t3 As I said last week, Boards and Senior Managers need assurance now that they are not falling on the wrong side of this story. #FinProm #Greenwashing #FCA #Promontory

Another good news from UK ;-) Financial Conduct Authority announced proposition for ESG guidelines to tackle greenwashing ??. Does that make sense for a financial watchdog to go after ESG? Maybe - our inability to sanction greenwashing stands in sharp contrast to multi-million fines for money laundering. When Decathlon and H&M were caught in September using misleading sustainability communication, it ended up with 500K Euro in donations. When financial authorities catch banks on money laundering, the fines are in '000 M of USD. Should Financial authorities in be entitled to sanctioning the breach of existing laws on sustainability communication?. For now, FCA mentions only introducing labels. Nothing about fines for greenwashing. #sustainability #esg #finance #regulations

The UK Financial Conduct Authority has (finally) published its consultation paper for the UK's Sustainability Disclosure Requirements (SDR). Unlike the EU SFDR, the UK SDR proposes a traffic-light system for green product classification: "sustainable focus", "sustainable improvers" and "sustainable impact". The overlap and possible confusion with the SFDR (and existing UK TCFD disclosures) will no doubt create even more work for lawyers... #esg #sustainablefinance

An excellent and timely piece from FTAdviser - link below Product Management Product Governance is key to the clarity the #FCA is seeking to drive - so Product Taxonomy will be key See - Kore Labs - www.korelabs.co - to see how you can enhance your product categorisation and adherence with these rules and coming regulatory changes Contact Josh Blundell and Sofia Galante to find out more. The Financial Conduct Authority said the measures are among several potential new rules which will protect consumers and improve trust in sustainable investment products.? A set of three fund labels to distinguish types of sustainable investment products. There will be three categories: - products investing in assets that are environmentally or socially sustainability, sustainable improvers - products investing in assets to improve the environmental or social sustainability over time, and sustainable impact - products investing in solutions to environmental or social problems to achieve positive, measurable real-world impact.? Other proposed rules include: 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. It is also proposing a more general anti-greenwashing rule covering all regulated firms. 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. #Productgovernance #productmanagement #financialproducts #ESG #sustainability #greenwashing #Climatechange #consumerduty Ged Brannan Sara Facchinetti Stefano Silocchi Sabrina Del Prete Amani Boros Carolin Sch?nherr, CFA Carolyn Clarke Phil Smith Rupal Patel IAEngine Sally Clark Tracy Puttock Tracy Clarke Damian Hoskins Klara Hansen Acin # #sustainable John Liver Fabienne Konik