Information on firms sanctioned for greenwashing - April 2022

The number of firms from [the FCA’s] Advisors and Intermediaries portfolio that have been sanctioned for greenwashing since 1 January 2015?

Please indicate the figures for each year in the indicated period

Please indicate the total amount of fines for each year in the indicated period.

The FCA has defined greenwashing as ‘marketing that portrays an organisation’s products, activities or policies as producing positive environmental outcomes when this is not the case’.

We can confirm that the FCA has not sanctioned any firms in the Advisors and Intermediaries portfolio for greenwashing from 2015 to date. The Advisors and Intermediaries portfolio is primarily made up of financial advisers who offer advice on retail investment products.  Firms will typically hold the ‘Advising on Investments’ permission and provide regulated advice on investing, protection, saving into a pension and taking income in retirement. A proportion of these firms provide defined benefit pension transfer advice and most firms also generate revenue from advice on products in other portfolios (e.g., mortgages and insurance).​ A smaller sub-set of firms are referred to as ‘other investment intermediaries’, these firms operate more ‘niche’ services for retail clients to purchase investments on a non-advised basis, investment consultancy services to retail consumers/corporates and authorised professional firms (e.g., solicitors and accountants).

However, please note that the FCA takes a range of actions beyond enforcement sanctions to prevent greenwashing. These may include agreeing to voluntary or imposing own initiative requirements, requiring the firms which have communicated or approved a potentially misleading advert to withdraw it or change it so that it complies with our requirements. In the most serious circumstances, we will use our powers under s.137S FSMA to ban a promotion or advert. For firms acting outside of regulation, we also have a range of tools to take proportionate enforcement action, including issuing alerts on our website and asking for harmful content to be removed, challenging firms and individuals’ activities via technical correspondence or publishing consumer alerts, and escalating the most egregious matters to our Unauthorised Business Department teams for investigation using our powers under FSMA and with a view to commencing civil, criminal and/or insolvency proceedings. 

The FCA has also recently introduced prescriptive climate reporting requirements for around 700 listed companies based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, and the FCA can and will take action for breaches of these rules. Further information on the FCA’s enforcement powers is available here[1].

Regarding our wider greenwashing policy, we are keen to ensure our disclosure regime is transparent and effective, and mitigating the risk of greenwashing is a particular focus for us as it has the potential to undermine investor confidence and market integrity. We are currently taking a number of steps to ensure that investors are given clear and reliable information about the products, activities or policies of firms. To this end, we have issued a letter to the Chairs of authorised fund managers (available here[2]), which includes a set of guiding principles for the design, delivery and disclosure of retail ESG and sustainable funds. These guiding principles build on the requirements in our Handbook of rules and guidance, including that firms must be ‘clear, fair and not misleading’ in client communications. We will continue to promote higher standards in this area, so that consumers are not misled and can rely on the ESG claims that firms are making.

In addition, we are working with the Government to develop complementary additional rules, including a Sustainability Disclosure Regime and the creation of a sustainable investment label. SDR and the label will allow consumers to navigate the complex array of products on offer. This package of measures will help firms compare the impacts and sustainability of their investments, building trust in the market for sustainable investment products and combating potential greenwashing. We issued a Discussion Paper in the autumn seeking input ahead of a formal consultation this year. Going forward, we will do more to strengthen the credibility and accuracy of firms’ and listed companies’ ESG-related claims more broadly – for instance, their net zero targets. We are also working with data analysis colleagues to consider how they can help us use data-led supervisory tools to track firms’ sustainability-related claims.

We will continue to consider responses to serious misconduct in this space, including the use of our enforcement power in the event of serious misconduct.