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  • Writer's pictureDeborah

On October 25, the Financial Conduct Authority (FCA) released a package of new measures against greenwashing to tackle the “growing concerns that firms may be making exaggerated, misleading or unsubstantiated sustainability-related claims about their products; claims that don’t stand up to closer scrutiny”.

These proposals build upon the Discussion Paper on Sustainability Disclosure Requirements and investment labels (DP21/4), published last November (see our previous article here).

The proposed rules introduce various requirements as outlined hereunder.

Sustainable investment product labels

The FCA is proposing a classification and labelling of products that will help consumers to choose their products confidently. The classification is based on ‘intentionality’ and distinguishes between three different types of sustainable product :

  • Sustainable focus : products that invest in assets that are environmentally and/or socially sustainable

  • Sustainable improvers : products whose investment strategy goal is to improve the environmental and/or social sustainability of assets over time

  • Sustainable impact : products that invest in solutions to environmental or social problems, to achieve positive, real-world impact

The labels will be based on a set of clear, objective criteria that ``set a high bar for quality and integrity`` and cover specification of an objective, investment policy and strategy, key performance indicators, firm-level attributes (resourcing and governance of ESG), and investor stewardship.

Naming and marketing rules

The FCA is proposing restrictions on how certain sustainability-related terms, such as ‘ESG’, ‘green’ or ‘sustainable’, can be used in product names and marketing for products which don’t qualify for the sustainable investment labels. This will ensure that product names and marketing is consistent with the product’s sustainability-related objectives and strategy.

More generally, and to avoid greenwashing, sustainability-related claims must be clear, fair and not misleading.

Consumer-facing disclosures

These disclosures will help consumers understand the key sustainability-related features of an investment product (e.g., sustainability objective, investment approach, and performance against the objective).

These disclosures requirements concern the following:

  • Location - i.e., one standalone document to be included on the main product webpage etc… )

  • Production of a consumer-facing disclosure for all in-scope products

  • Format : There is no prescribed template, although firms must ensure that the disclosure is (i) clear and concise; (ii) done in a format that is suitable for consumers; and (iii) the contents of the disclosure must not exceed 2 pages of A4 when printed but must be accessible in digital format.

  • Content : must include the information listed by the rules (e.g., product label, sustainability goal, sustainability approach, sustainability metrics, unexpected investments…

  • Frequency of disclosure and updates: with the first consumer-facing disclosures to be made available at the same time as the label (starting 2024). Thereafter, disclosures must be reviewed and updated at least on an annual basis.

More detailed disclosures

For a broader audience that include institutional investors or retail investors that want to know more. These detailed disclosures will cover:

  • Pre-contractual disclosures that set out the sustainability-related features of an investment product (e.g., its sustainability objective and investment policy and strategy). These disclosures are mandatory for products that use a label and products that do not use a label, but which have sustainability-related features that are integral to their investment strategy

  • Ongoing sustainability-related performance information in a ‘sustainability product-level report’. These reports must be produced for products that use a label.

  • Entity-level disclosures, in a ‘sustainability entity report’. This will demonstrate how firms are managing sustainability-related risks and opportunities and must be done regardless of the fact that impacted firms use a label.


Distributors of in-scope investment products to retail investors in the UK will be required to make the sustainable investment label and consumer-facing disclosures available to those investors.

Through these proposed rules, the FCA objective is to prevent the erosion of investors’ confidence in the investment sustainable market that may be caused by greenwashing.

Comments must be provided before January 25, 2023; the final rules will be released by the end of the first half of 2023.

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