FCA Proposes new rules against ‘Green Washing’

As part of the FCA’s mission to increase protection and further engage in consumer facing markets, the FCA has signalled it’s intention to examine the ESG Credentials of firms claiming to offer investment products marketed as ‘green’. Whilst being able to offer ‘green’ products with a sustainable basis has become more prevalent in the market, there is no way for consumers to be able to measure or judge the impact of these schemes. In many cases, these claims can be exaggerated, misleading or unsubstantiated and this has subsequent market implications in damaging the credibility of genuine schemes making a real impact on the environment.

Some of the FCA’s proposals include sustainable investment product labelling, restrictions on how certain sustainability related terms can be used in marketing, such as ‘ESG’, ‘green’ or ‘sustainable’, and a requirement for companies to include disclosures to the consumer to them understand the key sustainability aspects of an investment product.

Whilst these proposals will impact on the overall cost of regulation for companies, the ability for consumers to be able to better judge the green credentials of a product, based on its real-world impact, is certainly a necessary component of incentivising schemes to focus effects on actions with a positive impact for the environment.

One example of this is the start-up Plant Farm Movement, which is being created to to convert animal farms to sustainable arable production in order to unlock the carbon capture, food innovation and renewable energy potential of UK farmland.

https://plantfarmsmovement.com/