The FCA is proposing to extend its anti-greenwashing labelling rule for sustainable investments to portfolio managers.

The move comes in ahead of the anti-greenwashing rule coming into force on 31 May.

The proposed labelling and Sustainability Disclosure Requirements (SDR) for portfolio managers largely mirror those introduced for asset managers in November 2023. They include:  

• product labels to help consumers understand what their money is being used for. 
• naming and marketing requirements so products can only be described as having positive outcomes on the environment and/or society when those claims can be backed up. 

The FCA said its new rule is designed to protect consumers by ensuring sustainable products and services they are sold are accurately described. The regulator acted isin response to concerns about the estimated $18.4trn (£14.55trn) of ESG-orientated assets now being managed globally.

The regulator said it is acting following the results from its latest  Financial Lives survey which showed significant consumer interest in sustainable finance as 81% of adults surveyed sayinmg they would like their investments to do some good as well as provide a financial return.

Sacha Sadan, director of environmental, social and governance, FCA, said: “Confirming the new anti-greenwashing guidance and our proposals to extend the Sustainability Disclosure Requirements and investment labels regime are important milestones that maintain the UK’s place at the forefront of sustainable investment.

“Our good and poor practice anti-greenwashing examples will help firms market their products in the right way. We continue to work closely with the ASA and CMA to address greenwashing.” 

He said consumers care about investing in products that have a positive impact on the planet and people which is why the regulator wants to boost the integrity of the market and ensure people can make informed decisions about how to invest their money. 

In November 2023 the FCA finalised the Sustainability Disclosure Requirements and investment labels regime, a substantial package of measures to improve trust and transparency of investment products and minimise greenwashing.

The anti-greenwashing rule will come into effect from 31 May. UK-based fund managers can use the investment labels from 31 July. The naming and marketing rules for UK-based fund managers come into effect from 2 December.

The FCA said it is working closely with the Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA) to tackle greenwashing. While there are separate regulatory responsibilities there are some important areas that overlap, the FCA said.