In a bid to clamp down on greenwashing, the Financial Conduct Authority (FCA) is proposing a package of new measures, including and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used.
The measures are among several potential new rules which will protect consumers and improve trust in sustainable products.
The work forms part of the commitment made in the FCA’s ESG Strategy and Business Plan to build trust and integrity in ESG-labelled instruments, products and the supporting ecosystem.
There has been growth in the number of investment products marketed as ‘green’ or making wider sustainability claims.
Exaggerated, misleading or unsubstantiated claims about ESG credentials damage confidence in these products.
The FCA wants to ensure that consumers and firms can trust that products have the sustainability characteristics they claim to have.
Sacha Sadan, the FCA’s director of environment social and governance, said: “Greenwashing misleads consumers and erodes trust in all ESG products.
“Consumers must be confident when products claim to be sustainable that they actually are. Our proposed rules will help consumers and firms build trust in this sector.
“This supports investment in solutions to some of the world’s biggest ESG challenges. This places the UK at the forefront of sustainable investment internationally.
“We are raising the bar by setting robust regulatory standards to protect consumers in line with our wider FCA strategy.”
