FCA vs greenwashing: Where we’re at

So far, a lot of the discussion around sustainable investing and how it is governed has focused on one part of the chain.

The emphasis has been: “This is going to change how fund managers talk about their products.”

Yet albeit quietly rules have come in which advice professionals, if they haven’t already, have to start paying attention to.

Since 31 May, an anti-greenwashing rule has come into effect which applies to “all FCA-authorised firms who make sustainability-related claims about products and services.”

It’s true that the rules around how sustainable investments are labelled apply to UK asset managers, but the anti-greenwashing rule applies to everyone.

The impact for advice firms

Advisers and planners are unlikely to be knowingly promoting ‘poor’ ESG funds as best in class to their clients.

What’s more likely to happen is firms inadvertently making investments sound ‘greener’ than they actually are – in other words, we think the most common form of greenwashing will be done unintentionally.

This is about more than just the language you use in client meetings or how you describe sustainable funds, but also what’s said in your suitability letters.

…this is an excerpt from an article ESG Accord’s Lee Coates and Elly Dowding wrote for Analyser subscribers. If you’d like to read on, sign up for a free trial.

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