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FCA’s new anti-greenwashing rules to take effect from 31 May

24 May 2024

By Harry Barnes, Senior Compliance Consultant

Following the recent publication by the Financial Conduct Authority (FCA) of its finalised guidance on the new anti-greenwashing rule, now is the time for firms to review their client communications and websites against this new rule to ensure they have identified and mitigated any regulatory or legal risk they may face.

The anti-greenwashing rule

Alongside the introduction of the UK’s Sustainable Disclosure Regime (SDR) which brings in labelling and disclosure requirements for UK funds with sustainability objectives, the FCA is introducing the anti-greenwashing rule, which requires all sustainability related claims to be fair, clear and not misleading. Under the rule, all sustainability references should be:

  • Correct and capable of being substantiated
  • Clear and presented in a way that can be understood
  • Complete – they should not omit or hide important information and should consider the full life cycle of the product
  • Comparisons to other products or services should be fair and meaningful

The anti-greenwashing rule applies to all FCA regulated firms making sustainability claims in their website or client communications. This is regardless of whether the product or firm is subject to any sustainability regime such as SDR or the EU’s SFDR. The rule does not just apply to environmental sustainability claims but also to social and governance related claims.

What steps should firms take?

All firms should be taking steps to review their websites and client communications to identify the sustainability related claims that are made, and to ensure that those claims are in line with the anti-greenwashing rule. Firms should be preparing to ensure that any areas requiring remedial action are dealt with and that effective processes are in place to ensure that all future client communications are compliant.

How IQ-EQ can help

Our expert team have created a client communications review process covering the new anti-greenwashing rule as well as existing financial promotions rules. The scope can be tailored to cover the firm’s highest risk areas or take a broader scope across all areas of risk arising from client communications and sustainability claims.

Our risk-based approach enables firms to identify areas of higher risk and those which may need remedial action.

To discuss how our expert team can help your firm navigate the regulatory and legal risks posed by the new anti-greenwashing rule, and other new FCA guidance around marketing, contact us today.

Working with IQ-EQ has been seamless – you and your team understand our business, advise us appropriately, and handle your side of our collective partnership so that we can focus on making good investment decisions. Evan Gibson SVP, Merchants Capital

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