GC23/3: Guidance on the anti-greenwashing rule

As announced in the final policy statement on the disclosure requirements and labeling of sustainability-related investment products, including investment fund shares (please see EventID 24131 in this context for a detailed description), the Financial Conduct Authority (FCA) has launched a new consultation (GC23/3) on proposed new guidance as regards compliance with the anti-greenwashing rule.
To recall, the anti-greenwashing rule is simple in terms and mandates that all sustainability-related claims be „fair, clear and not misleading“ and consistent with the sustainability characteristics of the product or service. It will come into force on May 31, 2024 in accordance with the beforementioned policy statement. To clarify what is meant by „fair, clear and not misleading“ and „consistent“, the FCA is now proposing new guidance in this context. In it, the FCA describes its expectations on this matter, including that
– claims are correct and can be substantiated with corresponding factual data.
– claims are straightforward and easily understood by the target audience. They are precise, avoiding vagueness and overly general terms and provisions. Technical terms must be clarified unless widely understood. The FCA expects firms to test communications with consumers to ensure that these expectations are met PRIOR to making any sustainability claims.
– claims are complete and contain all relevant information without hiding crucial details that could impact decision-making. If a claim is true only under specific conditions, these conditions must be clearly stated. Any limitations in the information, data, or metrics used in the claim should also be prominently disclosed. Furthermore, claims should not solely emphasize positive sustainability impacts, if there are negative aspects as well. They should present a balanced view of a product or service’s sustainability characteristics.
The proposed guidance also includes numerous examples to clarify the above noted expectations.