FCA anti-Greenwashing Rule

Question 1

Briefly explain what the FCA anti-green washing rule is

Answer 1

1. The FCA Anti-Greenwashing Rule is a regulation designed to prevent firms from making misleading sustainability claims about their financial products or services.
2. It ensures that any environmental, social, and governance (ESG) claims made by firms are accurate, clear, and not exaggerated.

Question 2

In May 2024 - FCA implemented a new anti-greenwashing rule that applies to all FCA regulated firms.

What does the new rule state about firms that make any reference to the sustainability characteristics of a product of service?

Answer 2

1. They should be consistent with the actual sustainability characteristics of that product or service.
   I.e. cannot overstate the environmental benefits of a product.
2. Should be fair, clear and not misleading.
3. Sustainability characteristics include both environmental (CO2 emissions) and social or corporate governance (board diversity)

Question 3

What is the FCA guidance around any communication about products relating to sustainability?

Answer 3

1. Should be backed by evidence. (Correct and capable of being substantiated)
2. Clear and presented in a way that can be understood.
3. Complete
   I.e. No omissions and should cover the full life-cycle of the product or service.
4. Comparisons to other products should be fair and meaningful.