New rules designed to combat greenwashing are being adopted by the U.K.’s Financial Conduct Authority (FCA).
The regulator confirmed that it’s implementing a package of reforms that aim to improve trust in the fund industry while curbing the risks of greenwashing.
The reforms include a new anti-greenwashing rule for all investment firms; product labelling requirements designed to help investors understand product sustainability goals and criteria; and naming and marketing requirements that aim to put an end to baseless sustainability claims.
“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,” said Sacha Sadan, director of environmental, social and governance at the FCA, in a release.
In addition to better protecting investors and improving investor decision-making, the FCA said the reforms are intended to shore up the fund industry’s position in the global asset management business.
“By improving trust in the sustainable investment market, the U.K. 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,” Sadan added.
The anti-greenwashing rule will come into effect on May 31, 2024, with the labelling requirements taking effect July 31, 2024, and the naming and marketing rules for asset managers come into force on Dec. 2, 2024.
The FCA said it’s also setting up an independent working group for the financial advice industry to aid compliance with the new regime.