The FCA hopes the proposals will protect consumer trust in ESG-related financial products and help consumers navigate the increasingly complex ESG-related financial market.
By Paul A. Davies, Nicola Higgs, Michael D. Green, James Bee, and Anne Mainwaring
On 25 October 2022, the UK’s Financial Conduct Authority (FCA) issued a consultation paper (the Consultation Paper) on Sustainability Disclosure Requirements (SDR) and investment labels.[1] According to the FCA, investment firms in the UK may intentionally or unintentionally be making exaggerated, misleading, or unsubstantiated sustainability-related claims about their products — also known as greenwashing — which has impacted consumer confidence in ESG-related or sustainable investment products in the UK. The proposals in the Consultation Paper seek to address this risk and restore consumer faith.