ESG InvestingApr 12 2023

FCA launches greenwashing tech sprint

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FCA launches greenwashing tech sprint

The Financial Conduct Authority is joining forces with 12 other regulators to take part in an inaugural greenwashing tech sprint.

In a statement yesterday (April 11), the regulator said it is inviting all UK-based firms interested in participating to apply.

The event is organised by the Global Financial Innovation Network, a group of 80 international organisations aiming to support financial innovation in the interest of consumers.

The FCA currently chairs the GFIN’s co-ordination group, which sets the overall direction, strategy and annual work programme.

“Exaggerated, misleading or unsubstantiated claims about Environmental Social and Governance (ESG) credentials damage confidence in these products and the FCA wants to ensure that consumers and firms can trust that products have the sustainability characteristics they claim to have,” the FCA said.

The aim of the exercise is to develop a tool or solution that regulators and the wider market can use to effectively tackle the risk of greenwashing in the industry.

The City regulator will host the sprint through its digital sandbox, and UK-based firms can apply to take part from April 17.

Some £94bn was put into responsible investment funds in February by UK investors, a figure that has been steadily rising.

However concerns over greenwashing, which is where a company exaggerates the environmentally-friendly nature of its products, have grown in tandem.

The FCA has released a consultation on the appropriate labelling of sustainable funds, as well as proposing to restrict how investment managers use terms like “ESG” and “green”.