The Financial Conduct Authority (FCA) has released new measures to ensure the trust and transparency of sustainable investment products.
The package of measures includes regulations on anti-greenwashing, clear product labelling, and transparent marketing requirements.
Sacha Sadan, director of environmental, social, and governance at the FCA, said the new “practical” regulations were made with consumer protection in mind.
“By improving trust in the sustainable investment market, the UK 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,” said Sadan.
Research conducted by the FCA exposed the lack of investor confidence in terms of sustainability-related claims, especially when firms use inconsistent terminology such as “ESG,” “green,” and “sustainable.”
By removing the uncertainty surrounding the market’s transparency, consumers may invest confidently without being misled by the false marketing that is now to be closely regulated.
Sadan added there has been a “huge amount of consultation with the industry … even on an international front.”
The regulator said the regime was holistically constructed and is designed to engage stakeholders, consumer groups, and expert groups, such as the Disclosure and Labels Advisory Group.
The measures will support the UK’s position as a world-leading, competitive centre for asset management and sustainable investment.