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A UK financial watchdog suggests regulations to stop ‘greenwashing.’

To prevent consumers from being duped by ‘greenwashing,’ or inflated promises surrounding ecologically friendly investments, Britain’s finance watchdog on Tuesday suggested new rules that would take effect in 2023.

The environmental, social, and governance (ESG) credentials of investments have attracted billions of dollars, but the definition of ESG is hazy.

The Financial Conduct Authority recommended a package of regulations, including ‘sustainability labels’ for investment products and limitations on the use of terminology like ESG, ‘green,’ or ‘sustainable.’ Britain aims to strengthen its position as a global leader in green finance.

It also suggests a broader anti-greenwashing law that would apply to product marketing.

‘Consumers are duped by greenwashing, which damages their trust in all ESG products. When products make claims of being sustainable, consumers must be convinced that these claims are true’ said Sacha Sadan, director of environment, social, and governance at the Financial Conduct Authority.

This puts the UK at the front of global sustainable investment.

The agency claimed that it was increasing up enforcement and checking on environmentally friendly products.

The guidelines will be finalised by the end of the first half of 2023 after a public comment on the proposals run through January 2023.


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