The FCA is introducing sustainability disclosure requirements and an investment labels regime after detailed engagement with a range of stakeholders, including industry, other regulators and consumer groups.
The measures aim to protect consumers by helping them to make more informed decisions when investing and enhance the credibility of the sustainable investment market.
Research has shown that investors were not confident that sustainability-related claims made about investments were genuine. A lack of consistency when firms use terms such as ‘green’, ‘ESG’ or ‘sustainable’ has also limited investor confidence
To tackle this issue, the FCA will introduce:
- an anti-greenwashing rule for all authorised firms to make sure sustainability-related claims are fair, clear and not misleading
- product labels to help investors understand what their money is being used for, based on clear sustainability goals and criteria
- naming and marketing requirements so products cannot be described as having a positive impact on sustainability when they do not have a positive impact
FCA Director of Environmental, Social and Governance Sacha Sadan said:
“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.
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By GlobalData“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 centre of investment.”
The package of measures was tested with over 15,000 people.