On 23 April 2024, the Financial Conduct Authority (FCA) published its finalised non-handbook guidance (FG24/3) on the anti-greenwashing rule. The guidance is intended to help firms understand and comply with the anti-greenwashing rule, which comes into force on 31 May 2024.
Background
The anti-greenwashing rule is part of a package of measures the FCA finalised in 2023 and published in its Policy Statement on sustainability disclosure requirements and investment labels (PS23/16). When the FCA published PS23/16, it also launched a consultation on draft general guidance to support the implementation of the anti-greenwashing rule – for more details, see our briefing.
By introducing the anti-greenwashing rule, the FCA aims to clarify to firms that sustainability-related claims about their products and services must be fair, clear and not misleading. It gives the FCA an explicit rule on which to challenge firms if it considers they are making misleading sustainability-related claims about their products or services and, if appropriate, take further action. The guidance in FG24/3 is designed to help firms understand and implement the anti-greenwashing rule, in light of feedback from some respondents to previous consultation paper CP22/20 on the SDR and investment labels who asked for guidance.
The finalised guidance
The FCA explains that feedback to its guidance consultation was broadly supportive of both the guidance and the initiative to minimise greenwashing. The main areas of feedback related to the examples set out in the draft guidance and requests for further clarity on the FCA’s expectations – e.g. calls for more examples covering a broader range of sectors, examples of good practice, and examples that include social as well as environmental scenarios. Many respondents also asked the FCA to clarify the scope of the anti-greenwashing rule and its interaction with other parts of the FCA Handbook.
In FG24/3, the FCA provides a summary of the feedback to the consultation and its response, as well as setting out its finalised guidance in Chapter 2. The guidance includes sections on scope, how the anti-greenwashing rule interacts with existing requirements and related guidance, and the FCA’s expectations under the rule along with examples of good and bad practice.
The FCA flags that the guidance is consistent with existing expectations and does not create new obligations for firms. Firms may consider the guidance as appropriate, depending on the nature of their business and the sustainability‑related claims they make.
Next steps
The guidance in FG24/3 comes into force at the same time as the anti-greenwashing rule itself, on 31 May 2024.