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Greenwashing refers to the practice of making exaggerated, misleading or unsubstantiated claims in relation to the sustainability credentials of financial products and services. The risk of greenwashing claims has risen significantly in recent years, in tandem with investor demand for more sustainable investment products. This has been evidenced not only by well-publicised enforcement action both in Europe and the UK, but also by a flurry of recent claims by NGOs against financial institutions.
For a number of years, the FCA has commented that firms' claims about their sustainability credentials must be "accurate", "reasonable" and "substantiated". It is therefore no surprise that the FCA recently designated "tackling greenwashing" as "a core regulatory priority", and introduced a new anti-greenwashing rule as part of its wider package of sustainability disclosure requirements.
The publication of the FCA's recent guidance consultation on the anti-greenwashing rule, alongside its recent comments on how UK authorised fund managers are embedding its "guiding principles", make this an opportune time for investment managers that are exposed in some way to the UK to look closely at how the new anti-greenwashing rule could affect fund distribution and investor-facing communications.
In our latest article appearing in edition 137 of the AIMA Journal, we explore what the FCA's guidance consultation will mean for the investment management industry. Click here to read our article.
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