A guide to the FCA’s anti-greenwashing measures for sustainable investment

Posted 22 January 2024 by Graeme Stewart

The FCA has published Policy Statement PS 23/16 along with a press release and their qualitative research paper.

In the press release Sacha Sadan, Director of Environmental, Social and Governance, FCA, said: “We’re putting in place a simple, easy-to-understand regime so investors can judge whether funds meet their investment needs – this is a crucial step for consumer protection as sustainable investment grows in popularity”.

The final package of measures includes:

  • An anti-greenwashing rule: For all FCA authorised firms to reinforce that sustainability-related claims must be fair, clear and not misleading. The FCA is also consulting on support guidance.
  • Four labels: To help consumers navigate the investment product landscape and enhance consumer satisfaction.

Implementation timeline

The anti-greenwashing rules will come into force 31 May 2024; firms can start to use the new labels 31 July 2024.

The FCA says that distributor firms have an important role to play in supporting consumers and the choices they make. Recognising “that not all advisers feel comfortable talking to clients about sustainability” they plan to set up an independent working group for the advice industry to work together to build on existing capabilities is sustainable finance, including how the SDR and labels support their role.

The investment objectives under the new labels

The FCA has summarised the objectives of each label as below:

Sustainability focus: To invest in assets that are environmentally or socially sustainable determined by a robust, evidence-based standard of sustainability.

Sustainability improvers: To invest in assets that have the potential to become more sustainable over time, determined by their potential to meet a robust, evidence-based standard of sustainability over time.

Sustainability impact: To achieve a predefined, positive measurable environmental and/ or social impact.

Sustainability mixed goals: To invest in assets that meet or have the potential to meet a robust, evidenced-based standard for sustainability, and / or invest with an aim to achieve positive impact.


These new rules are likely to dominate discussions in the foreseeable future, but it’s important to remember, while there have not been any new rules introduced for advisers to follow, firms should already be discussing all the different investment preferences a client may have and fully document them to evidence suitability under the current rules and deliver the outcomes expected under the Consumer Duty.

Firms should think about setting aside time to consider how the new labels will affect them, for example:

  • How might the labels affect the name/target market of their existing advice propositions?
  • What training* might their advisers need in order to present the new labels to their clients?
  • What training* might administrators and paraplanners need in order to conduct research and present advice using the new labels?

* A good starting point may be to review the qualitative research undertaken by the FCA. This gives an insight into customer understanding and thoughts on the new labels being named.


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Graeme Stewart

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Graeme Stewart