Menu
Save
Join us
Member sign in
Login

Fighting Greenwashing: FCA Standards for Sustainability Claims

By Rachel Baines, The Payments Association

Demand for sustainable products and services has never been higher, and businesses are eager to highlight their green credentials, leading many FCA-authorised organisations to expand their sustainable offerings. However, this positive trend has been marred by the rise of greenwashing, prompting the Financial Conduct Authority (FCA) to introduce a comprehensive package of measures on February 2, 2024.  

Aimed at combating greenwashing, this initiative seeks to ensure that sustainability claims made by these organisations are transparent, fair, and not misleading, thereby enhancing trust and transparency in sustainable investment products. This significant move by the FCA is not solely focused on ensuring compliance but is fundamentally about restoring and bolstering consumer confidence in sustainable finance. 

 

The Rise of Green Consumerism

There’s a growing appetite among consumers for products and services that are not only good for them but for the planet. This shift is increasingly driving FCA-authorised businesses to highlight their sustainability efforts. However, distinguishing genuine sustainable practices from mere marketing claims becomes challenging as more companies jump on the green bandwagon. The consequence? A sceptical consumer base that could potentially backslide on sustainable investments.

 

The Greenwashing Dilemma

Greenwashing — the practice of making exaggerated or false claims about the environmental benefits of a product, service, or company practices — poses a serious risk to consumer trust and market integrity. Misleading sustainability claims can distort consumers’ perceptions and decision-making processes, undermining confidence in the sustainable finance market. It’s a concern that the FCA takes seriously, recognising the potential long-term damage to consumer trust and the broader financial ecosystem.

 

FCA’s Anti-Greenwashing Guidance

The Financial Conduct Authority (FCA) has proposed comprehensive guidance as part of its broader Sustainability Disclosure and Labelling Regime. Aimed at combating greenwashing, this guidance includes detailed implementation timeframes and criteria for sustainability labels and ensures that sustainability claims by FCA-authorised organisations are fair, clear, and not misleading. Outlined in the FCA’s Policy Statement (PS23/16), this framework addresses investment labels, disclosure, and naming and marketing rules tailored for UK asset managers and distributors of investment products to retail investors. The introduction of investment labels marks a significant advancement, providing a clear framework for products that aim to achieve positive sustainability outcomes. These labels and the detailed criteria set forth by the FCA will play a pivotal role in guiding firms and protecting consumers.

This initiative marks a consequential step towards a transparent market where consumers can make informed decisions, covering a wide spectrum of sustainability claims to target all aspects of sustainable finance.

 

Who should take note?

Essentially, everyone in the finance sector. The FCA’s guidance is aimed at various stakeholders within the sustainable finance ecosystem, including investment firms, asset managers, and financial advisors. Any FCA-authorised organisation making sustainability claims needs to pay attention. The guidance outlines clear expectations for how sustainability claims should be presented and supported, ensuring they are backed by tangible evidence and clear methodologies.

 

What’s Next?

The implementation of these rules is phased, with the anti-greenwashing rule coming into force on May 31, 2024, and additional requirements for asset managers set for December 2, 2024. This staged approach allows firms adequate time to align their practices with the new guidelines.

The FCA’s measures represent an important stride towards eliminating greenwashing and fostering a sustainable finance ecosystem built on transparency and trust. As the sustainable finance market continues to evolve, adhering to these guidelines will be paramount for FCA-authorised firms seeking to make credible sustainability claims.

 

Embrace the future of sustainable finance by staying informed with our ESG Toolkit. Subscribe now for insights and ensure your organisation is aligned with the highest standards of sustainability claims.

The Payments Association

St Clement’s House

27 Clements Lane

London EC4N 7AE

+44 20 3540 9760

© Copyright 2023 The Payments Association. All Rights Reserved.

Follow us on

Back to main menu

Membership

Our members

Member benefits

Become a member

Plan your year

Merchant Community Membership

Join the merchant community

Are you a member of The Payments Association?

Member benefits include free tickets, discounts to more tickets, elevated brand visibility and more. Sign in to book tickets and find out more.
Sign in
Become a member
Contact us
Careers
Youtube Spotify Twitter Linkedin

Welcome

Log in to access complimentary passes or discounts and access exclusive content as part of your membership. An auto-login link will be sent directly to your email.

Haven't set up an account yet?
Having trouble logging in?

Having trouble signing?

We use an auto-login link to ensure optimum security for your members hub. Simply enter your professional work e-mail address into the input area and you’ll receive a link to directly access your account.

First things first

Have you set up your Member account yet? If not, click here to do so.

Still not receiving your auto-login link?

Instead of using passwords, we e-mail you a link to log in to the site. This allows us to automatically verify you and apply member benefits based on your e-mail domain name.

Please click the button below which relates to the issue you’re having.

I didn't receive an e-mail

Tip: Check your spam

Sometimes our e-mails end up in spam. Make sure to check your spam folder for e-mails from The Payments Association

Tip: Check “other” tabs

Most modern e-mail clients now separate e-mails into different tabs. For example, Outlook has an “Other” tab, and Gmail has tabs for different types of e-mails, such as promotional.

Tip: Click the link within 60 minutes

For security reasons the link will expire after 60 minutes. Try submitting the login form again and wait a few seconds for the e-mail to arrive.

Tip: Only click once

The link will only work one time – once it’s been clicked, the link won’t log you in again. Instead, you’ll need to go back to the login screen and generate a new link.

Tip: Delete old login e-mails

Make sure you’re clicking the link on the most recent e-mail that’s been sent to you. We recommend deleting the e-mail once you’ve clicked the link.

Tip: Check your security policies

Some security systems will automatically click on links in e-mails to check for phishing, malware, viruses and other malicious threats. If these have been clicked, it won’t work when you try to click on the link.

Need to change your e-mail address?

For security reasons, e-mail address changes can only be complete by your Member Engagement Manager. Please contact the team directly for further help.

Still got a question?

E-mail us