The UK’s financial regulator – the Financial Conduct Authority (“FCA“) – on 25 October 2022, published its “Sustainability Disclosure Requirements (“SDR“) and investments labels” Consultation Paper (CP 22/20) (the “Consultation Paper“).

This follows the FCA’s July 2021 “Dear AFM Chair” letter regarding improving the quality and clarity of authorised ESG and sustainable investment funds and November 2021 “SDR and investment labels” Discussion Paper (DP 21/4), both of which indicated that the FCA intended to toughen its stance towards greenwashing against the backdrop of increasing concerns over investment funds making ESG-related claims that are exaggerated, misleading or unsubstantiated.

Whilst noting that “tackling greenwashing is a core regulatory priority for the FCA“, the Consultation Paper proposes a set of new rules aimed at tackling greenwashing, including investment product sustainability labels and restrictions on how terms like “ESG”, “green” and “sustainable” can be used.

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