16 COMMENT COMMENT TACKLING GREENWASH
James Tucker, CEO at Twenty7Tec, explores how the housebuilding sector will be aff ected by new regulations from the FCA designed to tackle ‘greenwash.’
THE FCA PROPOSES INTRODUCING RESTRICTIONS ON HOW CERTAIN SUSTAINABILITY-RELATED TERMS ARE USED IN PRODUCT NAMES AND MARKETING
s green initiatives for consumers increase sector-wide, the Financial Conduct Authority (FCA) recently announced its plans to clamp down on greenwashing with new regulations. The new rules will limit how terms like ‘ESG’, ‘Green’ or ‘sustainable’ can be used, meaning that products need to sport sustainable investment product labels.
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WHAT IS GREENWASHING? Greenwashing is when a company misleads consumers into believing they are doing more to protect the environment than it really is. It’s a deceitful marketing tactic to target customers who prefer to buy products from environmentally conscious brands.
WHAT ARE THE NEW FCA REGULATIONS? The FCA has proposed various regulations to clamp down on greenwashing and discourage it from happening. As part of this, it proposes introducing restrictions on how certain sustainability-
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related terms are used in product names and marketing, helping eradicate misleading marketing messages. The FCA wants to introduce sustainable investment product labels to give consumers more confi dence when shopping. There will be three categories for the labels, each underpinned by objective criteria.
It will also introduce consumer-facing disclosures to help buyers understand exactly what the critical sustainability- related feature of an investment product is, as well as more detailed disclosures for institutional investors or retail investors that want to know more. For those in the housing and development sector, these new proposals mean that any green initiative must meet the new regulations and that great care is taken when developing marketing materials to ensure they are accessible and transparent. Sacha Sadan, the FCA’s director of environment, social and governance,
comments on the importance of the initiative: “Greenwashing misleads consumers and erodes trust in all ESG products. Consumers must be confi dent when products claim to be more sustainable that they actually are. Our proposed rules will help consumers and fi rms build trust in this sector. This supports investment in solutions to some of the world’s biggest ESG challenges. This places the UK at the forefront of sustainable investment internationally. We are raising the bar by setting robust regulatory standards to protect consumers, in line with our wider FCA strategy.”
WHAT IS THE IMPACT OF THE HOUSING SECTOR ON NET ZERO? Although the fi nger is pointed heavily at cows or cars when discussing a greener future, the housing market holds around a quarter of the responsibility. Findings from the Energy Savings Trust reveal that the housing sector is responsible for 21%
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