Final FCA guidance on new sustainability rule published

The FCA has published its final guidance ("Guidance") on the new anti-greenwashing rule coming into force on 31 May 2024.

The anti-greenwashing rule requires FCA-authorised firms to ensure that any references they make to the sustainability characteristics of their financial products and services are consistent with the sustainability characteristics of the product or service and are fair, clear and not misleading (ESG 4.3.1R).

Firms should ensure their sustainability-related claims are:

  • Correct and capable of being substantiated.
  • Clear and presented in a way that can be understood.
  • Complete – they should not omit or hide important information and should consider the full life cycle of the product or service.
  • Fair and meaningful in relation to any comparisons to other products or services.

The FCA views the new rule as largely reaffirming and clarifying existing obligations rather than imposing extensive new obligations (for example see Principles for Businesses Principle 7: " A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading"). In other words, firms should be considering this already.

However, the Guidance provides extra detail and examples to help firms evaluate their communications in practice. As usual, the FCA's enforcement approach will be focussed on when they have reason to believe that there is risk of consumer harm or where serious misconduct may have taken place.

Practical actions

If they haven't already, firms should incorporate consideration of the new anti-greenwashing rule into processes for drafting/approving:

  • Communications to clients in the UK about products or services. The new guidance clarifies that this includes claims about the firm itself where this is needed for a representative picture of the product or service.
  • Financial promotions to people in the UK.


The rule applies to all FCA-authorised firms whether clients are retail consumers or other businesses, including firms that approve financial promotions for unauthorised persons for communication in the UK, irrespective of whether they are subject to the Consumer Duty.

The rule applies to all communications about financial products or services that refer to the sustainability characteristics of those products or services. Although the Guidance examples largely focus on environmental claims, the Guidance states that the scope of the new rule is not limited to the environment or the climate but also social issues and corporate social responsibility claims. So claiming a product offers a better or more ethical way of investing or doing business would also fall within the scope of the new rule, even if this claim is not directly based on environmental credentials.

CMA and ASA overlaps

The Competition and Market Authority (CMA) and Advertising Standards Authority (ASA) have also been very active on greenwashing and challenging firms in all sectors on their obligations under consumer protection law. The FCA has worked closely with the CMA and ASA to ensure the Guidance and anti-greenwashing rule is consistent with the CMA guidance and the requirements of the ASA’s CAP and BCAP Codes. If you would like to find out more about the ASA and their approach to green claims, please see this article.

The FCA's Guidance in practice

As with most of the FCA's outcomes-based rules, the complexity for firms comes in understanding what compliance looks like in practice. The Guidance includes illustrative examples of good and poor behaviours. We can see the following themes in the Guidance:  

Good practice

  • Balanced and factually correct.
  • Accurately reflects how a firm behaves and how the product operates in real life.
  • Clear explanations
  • Backed by evidence, which is monitored and updated and from a credible source which is ideally publicly available.
  • Where firms rely on third parties for information, they consider the appropriateness of relying on such data, research, analytical resources and other information provided.

Poor practice

  • Exaggeration
  • Contradictory information
  • Claim can’t be supported by evidence, or doesn’t reflect what happens in practice.
  • Out of date evidence used (or evidence that will become out of date during lifetime of the communication).

Good practice

  • Claims use plain English and terms which the audience can understand.
  • Claims tested on customers to ensure understanding (if Consumer Duty applies).
  • Ongoing monitoring of consumer understanding and outcomes (if Consumer Duty applies).

Bad practice

  • Jargon or technical language.
  • Vague or broad terms.
  • Use of images, colours or logos that contradict , exaggerate or confuse the sustainability-related claims in the text.

Good practice

  • Balanced and representative claims that consider positive and negative impacts / features of a product or service.
  • Claims consider the whole lifecycle of a product.

Bad practice

  • Cherry picking of positive information, and hiding or minimising negative information or caveats.
  • Claims are true only for a point in time, or for a specific point in the product lifecycle.

Good practice

  • Comparisons supported by evidence.
  • It is clear what products/services have been compared.
  • The methodology for a comparison clear to customers.

Bad practice

  • Making a market-wide claim when only a limited sample has been used.
  • Comparison makes broad claims about a product’s superiority, when comparison only based on a limited set of features or characteristics.
  • Comparison appears legitimate but in reality does not compare like-with-like.

Next steps

Please let us know if you would like more information or if we can help you to review communications or policies in light of the FCA's new rule.

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