The Financial Conduct Authority’s (FCA) anti-greenwashing rule (AGR) has officially commenced, prompting firms to brace for potential upheaval as they navigate the compliance landscape.
Richard Andrews, the UK head of ESG (environmental, social, and governance) at KPMG, emphasized the magnitude of the task at hand: “While we anticipate a pragmatic approach from the FCA, authorized firms must not underestimate the scale of the endeavor required to meet AGR standards.”
Andrews stressed the necessity for firms to grasp the full extent of the requirements, particularly in substantiating sustainability-related claims across all financial services and product communications in the UK. Additionally, he emphasized the broader ramifications of such claims on public perception of their operations.
The AGR aims to bolster the industry’s longevity and competitive advantage by aligning business offerings with consumer expectations and bolstering the transparency of sustainability-focused financial products.
Key among the new regulations is the mandate for truthfulness and accuracy in sustainability claims related to products and services.
Andrews outlined crucial steps for firms, including prioritizing the review of existing sustainability communications based on clear criteria and consistent guidance. He also stressed the importance of establishing robust, forward-looking controls to ensure future communications adhere to AGR standards.
Alex Nurse, a partner at Kennedys, underscored the significance of the AGR, heralding it as a pivotal move towards greater transparency and corporate accountability in the financial services sector. Nurse emphasized the rule’s potential to mitigate the risk of greenwashing claims over time.
In preparation for heightened regulatory scrutiny, Nurse advised firms to ensure all communications regarding the sustainability attributes of their offerings are fair, clear, and substantiated with appropriate evidence.
As firms grapple with the implementation of the AGR, the industry is poised for a paradigm shift towards more transparent and accountable sustainability practices.
