A litigation lawyer at Osborne Clarke in Bristol is urging the region’s financial services firms not to fall foul of tough new rules aimed at combating so-called “greenwashing.”
Charles Crowne, a partner in Osborne Clarke’s litigation team who specialises in commercial and regulatory disputes, says businesses should review all communications that refer to the sustainability of their products and services.
His warning comes as the Financial Conduct Authority (FCA) publishes guidance on its anti-greenwashing rules that come into force on Friday, 31st May, and will apply to all regulated financial firms in the UK.
The new rules will enable the FCA to take action against firms that make misleading sustainability-related claims about their products and services. The FCA’s definition of sustainability refers to both environmental and social sustainability.
Businesses also need to consider carefully claims made about the business itself as they will be subject to existing consumer protection law, as well as existing FCA principles, and may also fall within the new rule. This potentially imposes a very high compliance burden on firms who want to brand themselves as sustainably focused.
The FCA says that firms should consider the “appropriateness” of relying on third-party data when making sustainability claims.
“When the new rule comes into force on 31st May, the FCA is likely to be proactive in terms of enforcement,” says Charles Crowne.
“There is no implementation period and the FCA will be unsympathetic to pleas that firms were not ready for the new rule, given its implementation has already been delayed once and, according to the FCA, it merely confirms pre-existing rules and standards.
“If firms are not prepared for the new anti-greenwashing rule, they should take action now by reviewing all communications that refer to the sustainability characteristics of products and services to ensure that they are fair, clear, and not misleading, and capable of substantiation with credible evidence.
“Firms will need to enhance their internal processes and policies to ensure they have robust controls around the making of sustainable claims.”
