Sonia Kataora, Partner at Barnett Waddingham: "Each year we're seeing more and more people wanting to understand not only where their money is being invested, but also how it is impacting sustainability more broadly. Particularly when it comes to their pension, people want to know they're not investing in their future at the cost of others.
"The FCA's new anti-greenwashing rules are definitely a step in the right direction to help give people the clarity they are seeking, but this shouldn't be a substitute for doing proper fund due diligence. The old saying is that you shouldn't invest in anything you couldn't explain to your granny! But given the new regulation only covers UK firms authorised by FCA, the full picture is still pretty murky for investors.
"The regulator will need to consider more wide ranging guidance if they want to improve overall confidence in sustainable investing and better outcomes for investors."
Cadi Thomas, Investment Consultant at Isio: “The Financial Conduct Authority’s (FCA) new anti-greenwashing rules set to take effect on Friday mark a significant advancement in regulatory oversight. These rules not only reaffirm and expand the existing frameworks established by the Advertising Standards Authority and the Competition and Markets Authority, which have long provided guidance on greenwashing and green claims, but we are particularly supportive of the alignment with the broader EU-led initiative to combat greenwashing on a larger scale.
The comprehensive nature of these rules, covering all communications for FCA-regulated firms, promises a substantial impact. By ensuring that both firms' own products and services, as well as those of third-party providers, are free from false or unsupported claims, these rules aim to elevate the integrity of sustainability information in the market. This wide-reaching approach, however, also highlights certain ambiguities, particularly regarding the required level of due diligence on third-party information and the management of past communications.
Despite these challenges, the introduction of the FCA's anti-greenwashing rules is a fundamentally positive development. It enhances transparency and reliability in sustainability claims, providing UK-based clients with greater confidence in the environmental or social credentials of their investments. We hope that this increased certainty will drive a stronger flow of capital towards sustainable investment opportunities, supporting the broader transition to a greener economy.”
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