The FCA published today its long-awaited Policy Statement on SDR (PS23/16 “Sustainability Disclosure Requirements (SDR) and investment labels“). This is over a year following the consultation in October 2022 (see our blog here)

The SDR Policy Statement is accompanied by a Guidance Consultation, GC23/2 “Guidance on the Anti-Greenwashing rule” (the “Guidance“), which follows feedback from the industry for further guidance on the expectation on firms in respect of the anti-greenwashing rule. The FCA is consulting on the Guidance and the consultation closes on 26 January 2024.

The Policy Statement covers investment labels, naming and marketing requirements as well as requirements for distributors in addition to the anti-greenwashing rule.

In this blog we have focussed on the greenwashing rule including what it means for firms in terms of implementation and compliance.  Please refer to our blog on the other measures here.

The anti-greenwashing rule


The FCA is introducing a package of measures designed to inform and protect consumers and improve trust in the market for sustainable investments.  One of the measures is an anti-greenwashing rule.  The rule will be set out in a new Chapter 4.3 of the Environmental, Social and Governance sourcebook in the FCA Handbook (ESG 4.3.1).

The new rule will require any firm that:

  1. communicates with a client in the United Kingdom in relation to a product or service or
  2. communicates a financial promotion to, or approves a financial promotion for communication to, a person in the United Kingdom,

to ensure that any reference to the sustainability characteristics of a product or service is: (i) consistent with the sustainability characteristics (i.e., the environmental or social characteristics) of the product or service, and (ii) is fair, clear and not misleading.

The Guidance provides further colour on what is expected of firms and also how the anti-greenwashing rule interacts with other requirements such as Consumer Duty, COBS 4, PRIN, etc.

The Guidance indicates that the FCA expects firms to ensure that any communications they make which include sustainability related claims must be:

  • correct and capable of being substantiated – the firm should not state or imply features of product/service that are not true; it should also not exaggerate any sustainability features; statements should be substantiated and firms should consider if they have appropriate evidence and if such evidence should be made public; firms making or approving a financial promotion should regularly review the claims and evidence underpinning it;
  • clear and presented in a way that can be understood – sustainability claims should be transparent and straightforward; terms used should not be vague, broad, generic or technical; the overall impression is important – this include images, logos and colours which can imply sustainability even if the statements themselves are not making such claims;
  • complete – claims should not omit or hide important information and should consider the full life cycle of the product or service; conditions and caveats should be prominent; and
  • fair and meaningful in relation to any comparisons to other products or services – comparative statements (against competitors or industry) should be fair, meaningful and substantiated.


The anti-greenwashing rule will apply to all FCA authorised firms that make sustainability related claims about their products and services.

The rule applies in respect of communications, financial promotions or approval of financial promotions to any clients or relevant persons (therefore is broader than e.g. the Consumer Duty which focuses on retail clients/consumers).


The anti-greenwashing rule will come into force on 31 May 2024.

It was originally expected to apply when this policy statement is published, but the delayed application is a recognition by the FCA that it will take longer to implement and guidance is needed (hence the proposed Guidance and associated consultation).

How? – Practical implications

The introduction of the anti-greenwashing rule will necessitate a review of their financial promotion and marketing frameworks by firms. An obvious first step is to identify products and services in respect of which firms make sustainability statements and undertake a gap analysis against the new rule and draft Guidance. Relevant policies, procedures, scripts, websites, statements, targets, information, images, marketing materials, etc will need to be reviewed and updated as needed. Relevant links to other compliance frameworks (e.g., Consumer Duty, COBS, financial promotions, etc.) will need to be identified and managed. Staff will need to be trained.

Key challenges will include:

  • The implementation timeframe which is short – It will be prudent for firms to commence an implementation exercise now in parallel with providing feedback to the Guidance consultation. This would mean that any steps taken prior to the final Guidance being published will then need to be reviewed and verified again against the finalised guidelines.
  • Benchmarking relevant approach adopted – In the absence of a UK taxonomy for what counts as sustainable UK firms will need to think carefully about creating a reasonable and sufficiently robust approach in this area and considering what level of due diligence they will adopt. The associated labelling, marketing and distribution regime that the FCA is bringing through the SDR (in addition to the anti-greenwashing rule) should help in supplying the relevant information and benchmark but are unlikely to be a full solution.
  • Divergence between UK and EU – Businesses operating in the UK and the EU will need to consider compliance with the FCA’s new anti-greenwashing rules alongside sustainability-related obligations they might have in the EU (e.g. under general ESG and financial service requirements as well as greenwashing specific considerations such as ESMA/EBA/EIOPA’s progress reports on greenwashing from the summer of this year with final reports expected in May 2024). As ever, divergence will present challenges for institutions running a global compliance model.
Shantanu Naravane
Shantanu Naravane
Partner, London
+44 20 7466 2077
Nish Dissanayake
Nish Dissanayake
Partner, London
+44 20 7466 2365
Marina Reason
Marina Reason
Partner, London
+44 20 7466 2288
Heike Schmitz
Heike Schmitz
Partner, Frankfurt
+49 69 2222 82540
Chris Hurn
Chris Hurn
Senior Associate, London
+44 2074 662 375