Europe: UK FCA'S Anti-Greenwashing Rule And Guidance Come Into Force On 31 May 2024

K&L Gates


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An anti-greenwashing rule comes into force in the UK on 31 May 2024. This is the first part of the FCA's Sustainability Disclosure Requirements.
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An anti-greenwashing rule comes into force in the UK on 31 May 2024. This is the first part of the FCA's Sustainability Disclosure Requirements.

The rule will apply to references to environmental or social characteristics in FCA authorised firms' communications with UK clients that either promote, or otherwise relate to, a product or service. Financial promotions of certain overseas products and services that authorised firms approve for UK distribution are also in scope–we commented earlier on when this approval may be necessary.

In one sense, the rule is nothing new in that it requires clear, fair, and not misleading communication. However, together with its accompanying guidance, it is indicative of greater regulator focus in this area and a requirement to meet a more exacting standard of accuracy in practice than has been the norm up to this point.

The guidance has not changed dramatically from the consultation version. However, new examples of good practice emphasise that relevant claims should be well-evidenced by reference to clear, credible, and measurable facts and that a firm's approach should be as transparent as possible. Also, the final guidance stresses the need to comply with the anti-greenwashing rule on an ongoing basis. Firms will therefore need to build regular anti-greenwashing checks into compliance monitoring processes

Furthermore, the guidance clarifies that the rule does not apply to claims that a firm may make about itself as a firm, or to images, etc., used in a context that does not refer to, or describe, the sustainability characteristics of a product or service. Other rules will, though, still apply to such claims or images, and in practice it may be difficult to untangle general claims about a firm's overall approach from claims about the specific products and services that it offers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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