The European Union recently announced that businesses across the continent would no longer be permitted to make generic and misleading claims relating to sustainable practices or operations.
The practice of greenwashing has had a detrimental impact on consumers, regulators and the environment as businesses have opted to make false claims instead of making real change.
However, a wide range of legally binding regulations will now prevent businesses from making false claims. The UK is also taking action and businesses will have to adhere to similar rules in 2024 following the introduction of measures from the Financial Conduct Authority.
Sustainability Disclosure Requirements will come into effect from May and the final consultation to finalise the rules are underway. The overarching principle is that businesses can only make claims about sustainable practices that are:
“Correct, capable of being substantiated, clear, complete and aiding informed comparison.”
Following the publication of these anti-greenwashing rules, businesses will be presented with the opportunity to display product labels if they can prove that they fit the new criteria.
- Sustainability Focus
- Sustainability Improvers
- Sustainability Impact
- Sustainability Mixed Goals
More information on using these labels will be published on the 31st July, 2024.
Finally, Asset Managers will have to meet stringent anti-greenwashing rules when naming, marketing and selling financial products.
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