On 28 November 2023, the Financial Conduct Authority (FCA) published its Policy Statement on Sustainability Disclosure Requirements (SDR) and Investment Labels (PS23/16) and a Guidance Consultation on the Anti-Greenwashing Rule (GC23/3).

PS23/16 follows the FCA’s consultation on SDR and Investment Labels (CP22/20) issued in October 2022, and introduces measures aiming to inform and protect consumers and improve trust in the market for sustainable investments. Notably it introduces: (i) an anti-greenwashing rule for all authorised firms (the Rule); (ii) four investment labels to help consumers navigate the market; and (iii) new rules and guidance for firms marketing investment funds on the basis of their sustainability characteristics. The focus of this article will be on the Rule and GC23/3.

The Anti-Greenwashing Rule

PS23/16 introduces an anti-greenwashing rule for all FCA-authorised firms, including asset managers, to reinforce that sustainability-related claims must be fair, clear and not misleading. The Rule applies to all communications about financial products or services which refer to the environmental and/or social (i.e., ‘sustainability’) characteristics of those products or services. The FCA highlights that sustainability-related references can be present in, but are not limited to, statements, assertions, strategies, targets, policies, information, and images.

Guidance Consultation GC23/3

GC23/3 sets out the FCA’s proposed guidance on the Rule, including its expectations for FCA-authorised firms making claims about the sustainability of a product or service. GC23/3 is designed to help firms that make such claims better understand the FCA’s expectations under the Rule and other existing, associated requirements. Most notably, GC23/3 proposes that sustainability claims should be:

1. correct and capable of being substantiated;
2. clear and presented in a way that can be easily understood;
3. complete and should not omit or hide important information, and should consider the full cycle of the product or service; and
4. fair and meaningful in relation to any comparisons to other products or services.

The FCA has highlighted that it seeks to align the Rule, and the proposed accompanying guidance, with existing requirements and expectations for firms. This includes requirements that are already contained within their handbook such as the Principles of Business (PRIN) and the Consumer Duty.

The Rule will come into force on 31 May 2024 and the deadline for comments on GC23/3 is 26 January 2024.

CP 22/20, PS23/16 and the Rule are available here, here and here, respectively.