{"id":38,"date":"2024-03-21T09:09:30","date_gmt":"2024-03-21T09:09:30","guid":{"rendered":"https:\/\/iqeq.com\/gb\/2024\/03\/21\/fca-publishes-proposed-guidance-on-new-anti-greenwashing-rule\/"},"modified":"2024-08-07T13:13:04","modified_gmt":"2024-08-07T13:13:04","slug":"fca-publishes-proposed-guidance-on-new-anti-greenwashing-rule","status":"publish","type":"post","link":"https:\/\/iqeq.com\/gb\/insights\/fca-publishes-proposed-guidance-on-new-anti-greenwashing-rule\/","title":{"rendered":"FCA publishes proposed guidance on new anti-greenwashing rule"},"content":{"rendered":"
\n

The Financial Conduct Authority\u2019s (FCA) consultation on <\/strong>the new anti-greenwashing rule guidance<\/strong><\/a>, closed on 26 January 2024.<\/strong> This guidance will apply to all FCA authorised firms who make sustainability-related claims about their products and services.<\/strong><\/p>\n

It supplements the current \u201canti-greenwashing rule\u201d,<\/a> which requires firms to ensure that any reference to the sustainability characteristics of a product or service is consistent, clear, fair and not misleading.<\/p>\n

The guidance acts as an aid to the implementation of the current anti-greenwashing rule, and provides four key principles that any sustainability claim must consider. The guidance also provides some practical examples explaining the implementation of these principles.<\/p>\n

The four principles require that sustainability-related claims are:<\/p>\n

Correct and capable of being substantiated<\/h4>\n

The guidance applies to all communications about products and services and not just those used for marketing and\/or sent to retail investors. Furthermore, the guidance states that sustainability-related references can be present in, but are not limited to, statements, assertions, strategies, targets, policies, information and images. This demonstrates how broad the reach of this guidance can be, and aesthetically pleasing images which may initially seem inconsequential, may be construed as making a sustainability reference.<\/p>\n

Firms should be able to support claims with robust, relevant and credible evidence. This puts a lot of pressure on firms to keep a record, not just of claims they are making, but of all evidence that supports those claims. Firms must ensure that evidence always remains current, otherwise the claims need to be withdrawn. This also applies to approvers of financial promotions. Furthermore, the guidance states that if reference of evidence is given, then it is helpful that that evidence is made available in a public space.<\/p>\n

Clear and presented in a way that can be understood<\/h4>\n

Claims should take into consideration technical language so that information is transparent and easy to understand. The guidance also highlights that visual presentations could create an overall impression. Though claims in themselves may be correct, the visual presentation may create a different impression.<\/p>\n

Complete and should not omit or hide important information and should consider the full lifecycle of the product or service<\/h4>\n

Sustainability-related claims should not favour highlighting positive impacts to hide or omit negative impacts. The information presented should always be balanced.<\/p>\n

Furthermore, claims need to consider the whole lifecycle of a product or service. If only a certain part of the lifecycle is being addressed, then this needs to be clearly explained. Information about the firm itself may also impact the decision about a product. Thus, the \u2018representative picture\u2019 also needs to be fair, clear and not misleading.<\/p>\n

In summary, there should not be any omission, nor any \u2018cherry picking\u2019 of information.<\/p>\n

Fair and meaningful in relation to any comparisons to other products or services<\/h4>\n

Comparisons of claims should be equitable and presented in the correct context. The guidance provides an example of a firm which claims that by purchasing their investment bond, investors will \u2018reduce emissions\u2019 more than through purchasing any other investment bonds on the market. This comparison only refers to Scope 1 emissions (as opposed to all emissions: Scope 1, 2 and 3) and is based on a limited sample at a particular date in time. However, this additional relevant information is not provided. Thus, the claim will be considered unfair and amount to greenwashing.<\/p>\n

Action required<\/h2>\n

The proposed guidance increases responsibility and accountability, and consequently, firms should always:<\/p>\n