FCA anti-greenwashing rule comes into force

The Financial Conduct Authority’s anti-greenwashing rule has now taken effect for all authorised firms in the UK, formalising a new baseline for how sustainability claims must be made across products and promotions in 2024. The rule sits within the FCA’s Sustainability Disclosure Requirements regime and is backed by final guidance FG24/3, giving firms a clearer view of how the regulator expects sustainability-related communications to be framed and evidenced. Those references must also be fair, clear and not misleading, aligning sustainability language with the FCA’s long-standing financial promotion standards rather than creating a separate, lighter-touch ESG disclosure regime.

This means claims about climate impact, biodiversity, labour standards, diversity, community outcomes or other social themes are all captured where they are presented as features or benefits of a product or service. It also applies when a firm communicates a financial promotion to any person in the UK, or approves a financial promotion on behalf of an unauthorised person, pulling in white-labelled offerings and third‑party marketing that rely on authorised approvers. By locating the rule in ESG 4.3.1R, the FCA has tied sustainability claims directly into its broader ESG framework, rather than treating them as a peripheral marketing issue.

FG24/3 was designed to help firms understand and implement the rule in light of feedback from consultation paper CP22/20 on Sustainability Disclosure Requirements and investment labels, where respondents had requested more concrete guidance.

Ahead of FG24/3, the FCA had issued proposed guidance GC23/3, with a response deadline of 26 January, giving stakeholders an opportunity to comment on the draft approach before it was finalised. The regulator originally proposed that the anti-greenwashing rule would take effect immediately on publication, but subsequently granted firms an additional six months to ensure compliance, extending the implementation period to 31 May.

Position within the SDR and labelling framework

The anti-greenwashing rule forms part of the FCA’s wider Sustainability Disclosure Requirements regime, which is being phased in alongside a new labelling and naming architecture for sustainable investments. Under this framework, UK-based fund managers will be able to start using FCA investment labels from 31 July, creating a standardised set of sustainability designations to sit alongside the anti-greenwashing baseline.

The regime also introduces dedicated naming and marketing rules for UK-based fund managers, which will come into effect from 2 December and will govern how sustainability-related terms can be used in product names and promotional materials. Together, the labels, naming rules and anti-greenwashing requirement form a linked set of tools aimed at improving the alignment between stated sustainability objectives, portfolio construction and external communications.

Supervisory coordination and consumer context

The FCA states that it works closely with the Advertising Standards Authority and the Competition and Markets Authority to tackle greenwashing, showing coordinated oversight across financial regulation, advertising standards and competition law. This collaboration is intended to create a more consistent enforcement environment for sustainability claims, whether they appear in regulated financial promotions or in broader marketing and corporate communications. That level of stated interest provides the backdrop for the anti-greenwashing rule, with the FCA positioning accurate sustainability claims as a prerequisite for informed consumer choice.

--- Sources: https://www.fca.org.uk/firms/climate-change-and-sustainable-finance https://www.globalfinregblog.com/2024/04/fca-publishes-final-guidance-on-its-anti-greenwashing-rule/ https://www.regulationtomorrow.com/eu/fca-publishes-finalised-guidance-on-the-anti-greenwashing-rule/