BDO comments on the FCA’s final anti-greenwashing guidance
BDO comments on the FCA’s final anti-greenwashing guidance
Commenting on the launch of the FCA’s final guidance to support its rule to prevent greenwashing by financial institutions, Richard Weighell, Financial Services Advisory Partner at accounting and business advisory firm BDO LLP said:
“We welcome publication of the FCA’s final guidance on the anti-greenwashing rule, introduced by the Sustainability Disclosure Requirements, which will provide welcome additional guidance to the industry.
“The final guidance and accompanying press release by the FCA confirms the 31 May 2024 as the date of entry into force for the rule. Now authorised financial institutions have clarity on the implementation date, there is now a short window to prepare.
“The FCA’s objective of introducing the anti-greenwashing rule is to protect retail and institutional customers from greenwashing while also creating a level playing field for firms offering products and services with genuine sustainable characteristics.
“As one of the 69 respondents to the three questions to FCA consulted on, we welcome the updates to the initial guidance. The key updates are: clarification of the scope of the anti-greenwashing rule; the provision of further examples by the FCA, including good practice examples; and clarification of the interrelation between the anti-greenwashing rule and the SDR’s naming and marketing rules.”
The finalised guidance on the anti-greenwashing rule will help the industry to better understand the rule and the steps they need to take to ensure that sustainability-related claims about products and services are fair, clear and not misleading, and are consistent with the sustainability characteristics of the product or service. Firms must prepare to mitigate the potentially significant risks relating to greenwashing, from reputational to regulatory, legal and financial risks.
While the scope of the anti-greenwashing rule relates to products and services, the FCA has reminded firms that the CMA and ASA’s guidance and FCA Principles 6 and 7 or, as relevant, the Consumer Duty (Principle 12 and the rules in PRIN 2A), already apply to sustainability-related claims that a firm may make about itself as a firm.
There is a short window to prepare for the 31 May deadline when the anti-greenwashing rule comes into effect. Firms have only a few weeks to finalise the implementation of controls to ensure that their sustainability-related information, including ads and marketing communications, are clear, fair and not misleading and can be substantiated.
The FCA is also consulting on extending the requirements on how sustainable investments are labelled and explained to portfolio managers, making consumer choice easier. Given that these requirements will create additional obligations on firms that manage a group of investments for consumers, which can either be offered as standardised products or tailored services, the responses from industry will be a key consideration for how the regime continues to evolve.
ENDS
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 18 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 164 countries and territories, with 111,300 people working out of 1,803 offices worldwide. It has revenues of US$12.8bn.
frank.x.shepherd@bdo.co.uk
07812 463601
“We welcome publication of the FCA’s final guidance on the anti-greenwashing rule, introduced by the Sustainability Disclosure Requirements, which will provide welcome additional guidance to the industry.
“The final guidance and accompanying press release by the FCA confirms the 31 May 2024 as the date of entry into force for the rule. Now authorised financial institutions have clarity on the implementation date, there is now a short window to prepare.
“The FCA’s objective of introducing the anti-greenwashing rule is to protect retail and institutional customers from greenwashing while also creating a level playing field for firms offering products and services with genuine sustainable characteristics.
“As one of the 69 respondents to the three questions to FCA consulted on, we welcome the updates to the initial guidance. The key updates are: clarification of the scope of the anti-greenwashing rule; the provision of further examples by the FCA, including good practice examples; and clarification of the interrelation between the anti-greenwashing rule and the SDR’s naming and marketing rules.”
The finalised guidance on the anti-greenwashing rule will help the industry to better understand the rule and the steps they need to take to ensure that sustainability-related claims about products and services are fair, clear and not misleading, and are consistent with the sustainability characteristics of the product or service. Firms must prepare to mitigate the potentially significant risks relating to greenwashing, from reputational to regulatory, legal and financial risks.
While the scope of the anti-greenwashing rule relates to products and services, the FCA has reminded firms that the CMA and ASA’s guidance and FCA Principles 6 and 7 or, as relevant, the Consumer Duty (Principle 12 and the rules in PRIN 2A), already apply to sustainability-related claims that a firm may make about itself as a firm.
There is a short window to prepare for the 31 May deadline when the anti-greenwashing rule comes into effect. Firms have only a few weeks to finalise the implementation of controls to ensure that their sustainability-related information, including ads and marketing communications, are clear, fair and not misleading and can be substantiated.
The FCA is also consulting on extending the requirements on how sustainable investments are labelled and explained to portfolio managers, making consumer choice easier. Given that these requirements will create additional obligations on firms that manage a group of investments for consumers, which can either be offered as standardised products or tailored services, the responses from industry will be a key consideration for how the regime continues to evolve.
ENDS
Note to editors
About BDOAccountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.
The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.
We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.
BDO LLP
BDO LLP operates in 18 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 164 countries and territories, with 111,300 people working out of 1,803 offices worldwide. It has revenues of US$12.8bn.
Contacts
Frank Shepherdfrank.x.shepherd@bdo.co.uk
07812 463601