The Financial Conduct Authority (FCA) has finalized the latest steps in its sustainability disclosure requirements (SDR), which include an anti-greenwashing rule to help combat misleading content presented to investors.
The rules, which were consulted on by stakeholders, other regulators and consumer groups, aim to protect consumers and investors by helping them make more informed decisions when allocating funds. The anti-greenwashing rule applies to all authorized firms and is targeted at ensuring sustainability-related claims are ‘fair, clear and not misleading,’ the regulator says.
Additionally, product labels must indicate to investors where their money is being used as well as address clear sustainability goals and criteria concerns. The FCA has also issued naming and marketing requirements on services and products to help avoid misleading greenwashing claims.
The new SDR and labeling rules fit into the wider reporting requirements and standards regimes in the UK initiated by the International Sustainability Standards Board.
Easy to understand regime
‘We have been concerned that some firms may be making misleading or exaggerated sustainability-related claims about their investment products,’ the regulator explains in its SDR report.
‘Our anti-greenwashing rule applies to all FCA-authorized firms [that] make sustainability-related claims about their products and services. The investment labels, disclosure and naming and marketing rules apply to UK asset managers. We have also introduced targeted rules for the distributors of investment products to retail investors in the UK.’
Sacha Sadan, director of ESG at the regulator 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 center of investment.’