The FCA has published a consultation on certain “corrections and clarificatory amendments” to the anti-greenwashing rule and UK Sustainability Disclosure Requirements (SDR) as part of its Quarterly Consultation Paper. 

The amendments are proposed to align the drafting of the ESG sourcebook to the FCA’s initial policy intentions.

The proposed amendments and clarifications include:

• clarifying that where distributors are distributing recognised schemes to retail clients that use the terms set out in ESG 4.3.2R(2) in either the name of the recognised scheme or a financial promotion relating to the scheme, the distributor should include the notice that the scheme is not in scope of SDR in a prominent place on the digital medium at which the scheme is offered. These can be viewed in Annex F of the Quarterly Consultation Paper;
• extending the anti-greenwashing rule beyond financial promotions to any communication made by a firm;
• clarifying that feeder funds only need to comply with ESG 4.3.5R(3) when they are not using a sustainability label;
• extending the requirement for managers using a sustainability label to disclose both KPIs that it will use and any other metrics that a retail client may find useful; and
• amending ESG 5.4.3R(1) to allow managers a 16-month period from the start of their use of a label or the terms set out in ESG 4.3.2R(2) rather than the current 12-month period.

The key change proposed by the FCA

The key change proposed by the FCA is the formal extension of the anti-greenwashing rule beyond the scope of financial promotions to any communications made by a FCA-authorised firm. FCA-authorised firms should check to ensure that their governance processes track this expanded ambit and are well equipped to prevent any greenwashing claim being made in relation to a communication made, even if where that communication is not a financial promotion. Many FCA-authorised firms will have already applied this wider scope as a matter of best practice following the implementation date of the anti-greenwashing rule earlier this year.