UK financial watchdog proposes rules to stamp out 'greenwashing'

BRITAIN’S financial watchdog proposed new rules on Tuesday (Oct 25) from 2023 to stop consumers being hoodwinked by ‘greenwashing’, or exaggerated claims regarding environmentally friendly investments.

Trillions of dollars have flowed into investments touting their environmental, social and governance (ESG) credentials, but rules on what constitutes ESG are patchy.

Britain wants to bolster its global role in green finance and the Financial Conduct Authority proposed a package of measures, including ‘sustainability labels’ for investment products, and restrictions on how terms like ESG, ‘green’ or sustainable can be used.

It is also proposing a more general anti-greenwashing rule to cover marketing of products.

“Greenwashing misleads consumers and erodes trust in all ESG products. Consumers must be confident when products claim to be sustainable that they actually are,” said Sacha Sadan, the Financial Conduct Authority’s director of environment, social and governance.

“This places the UK at the forefront of sustainable investment internationally.”

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The watchdog said it was stepping up checks on sustainable products and enhancing enforcement.

A public consultation on the proposals is open until January 2023, with the rules finalised by the end of the first half of 2023. REUTERS