The anti-greenwashing rule (AGR) of the Financial Conduct Authority (FCA) has come into effect, and firms are being urged not to underestimate what it takes to achieve compliance.
“While we expect the FCA to take a pragmatic approach and give authorised firms some leeway while they embed the AGR expectations, firms should not underestimate the scale of work required,” Richard Andrews (pictured), UK head of ESG (environmental, social, and governance) at KPMG, commented.
“They will need to be able to demonstrate that they have understood the scope of the requirements and are able to substantiate sustainability-related claims in all their communications relating to financial services and products in the UK. They also need to consider the wider implications of any claims made at firm-level and the impacts these could have on the perception of their operations.”
The AGR is aimed at fostering the industry’s long-term development and competitive edge by aligning business offerings with consumer expectations and enhancing the transparency of financial products that are centred on sustainability.
Under the new regulation, sustainability claims made about products and services should be truthful and accurate.
“Prioritisation of the review of existing sustainability-related comms based on a clear set of criteria and consistent guidance will be key,” Andrews added. “Firms should also focus on developing robust, forward-looking controls to ensure that future comms regarding products and services are aligned to the AGR.”
Meanwhile, Kennedys partner Alex Nurse pointed to the significance of the new standard.
She declared: “The anti-greenwashing rule marks a significant step towards establishing greater transparency and corporate accountability for consumers and, in the long term, will help mitigate the risk of greenwashing claims brought in the financial services sector.
“In anticipation of regulatory scrutiny regarding compliance, firms will need to ensure that all aspects of their communications relating to the sustainability characteristics of their products and services are fair, clear and not misleading, and that they can be substantiated with appropriate evidence.”
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