FCA grants funds extension for anti-greenwashing rule

It said funds still need to submit applications to comply with Britain's SDR disclosure rules by October 1, 2024, but now have extra time to make name changes and comply with marketing requirements

Britain's financial watchdog said on Monday it had granted an extension for 'naming and marketing' rules aimed at tackling 'greenwashing', giving companies until April 2025 to comply.

It said funds still need to submit applications to comply with Britain's Sustainability Disclosure Requirements (SDR) disclosure rules by October 1, 2024, but now have extra time to make name changes and comply with marketing requirements.

Regulators across Britain and Europe are working to help investors align their money with environmental or social principles by requiring thousands of funds to be more transparent about their sustainability-related claims.

Sustainability Disclosure Requirements is designed to protect consumers by ensuring sustainable products and services they are sold are accurately described and incorporates sustainability labels for funds, new reporting and disclosure requirements and a rule to combat greenwashing.

Britain's FCA said in a statement that firms should take all reasonable steps to ensure compliance with the naming and marketing and disclosure rules, which become effective from December 2.

It said the compliance deadline extension was granted as some companies, especially those wanting to use an investment label or needing to alter their product names, require extra time to meet the high standards and prepare the necessary disclosures for approval.

Oscar Warwick Thompson, head of policy at the UK Sustainable Investment and Finance Association, said the Financial Conduct Authority had shown pragmatism, but cautioned this should not lead to complacency.

We strongly encourage firms to keep up momentum in their implementation processes, ensuring high-standard disclosures for clients, he added.

Chris Cummings, chief executive of the Investment Association, said the move would provide companies seeking to apply labels to funds with the much-needed additional time to work together with the regulator to comply with the new regulation.