BDO comments on FCA consultation on new rules to tackle greenwashing

Commenting on the launch of the FCA’s consultation on new rules designed to tackle greenwashing, Richard Weighell, Financial Services Advisory Partner at accounting and business advisory firm BDO said:

"This is a significant publication by the FCA and is one that has been eagerly anticipated by both providers and users of financial products and services.

“The proposals for consultation centre around two key components: sustainability disclosure requirements; and sustainable investment labels. The disclosure requirements mean certain financial services firms will need to report on their sustainability risks, opportunities and impacts and build on existing frameworks such as the Taskforce on Climate-related Financial Disclosures (TCFD) and the forthcoming UK Green taxonomy, but also incorporate wider sustainability matters other than the environment. On the labelling side, the proposed investment labels related to sustainability credentials will need to be applied to certain investment products”.

“Ultimately, this is about establishing a consistent and comparable way for financial services firms to report their sustainability performance, thus reducing the risk of greenwashing. It’s also about giving retail and institutional investors a reliable means of comparing sustainable products and services – something which arguably hasn’t been possible to date.

“The challenge facing the FCA, however, is that these new rules will need to align closely with other developing international standards. If there is too great a divergence, this could prove a big regulatory headache for financial services firms operating internationally.”

The FCA is seeking responses to the consultation from across the financial services sector, as well as other interested parties, by 25 January 2023 with a view to publishing final rules by the end of the first half of 2023.

BDO will shortly be publishing a more in-depth analysis of the consultation on its website.

ENDS

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