UK / Canada / Singapore - FCA consultation on Sustainability Disclosure Requirements and investment labels

  • Market Insight 11 January 2023 11 January 2023
  • Asia Pacific, North America, UK & Europe

  • Climate change risk

In the UK, the Financial Conduct Authority (FCA) is nearing the end of a three-month consultation period on proposed measures to combat greenwashing, the practice of making exaggerated or misleading sustainability-related claims about investment products, which, in turn, erodes consumers’ trust in the market.

The consultation builds on the FCA’s Task Force on Climate-Related Financial Disclosures (TCFD)-aligned product- and entity-level disclosure rules, introduced in 2021, and forms part of the commitment made in the FCA Environmental, Social and Governance (ESG) Strategy and Business Plan to build trust and integrity in ESG-labelled products. More broadly, these measures seek to support the UK’s aim to achieve a net zero economy by 2050.

Respondents have until 25 January 2023 to respond to the FCA’s package of measures, which includes sustainable investment labels, disclosure requirements and the certainty that sustainability-related terms in the naming and marketing of products are proportionate to their sustainability profile. The FCA has also produced qualifying criteria that will ensure firms are indeed able to substantiate the claims they are making.

The three labels (“sustainable focus”, “sustainable improvers” and “sustainable impact”), together with the disclosure requirements, aim to give consumers the information they need to make informed choices about which products meet their preferences. While firms are free to decide whether or not they use such labels, they must meet qualifying criteria, requiring firms to substantiate their claims if they do so. Finally, the labels do not seek to establish a hierarchy and instead are designed to describe the different profiles of assets most accurately.

In addition to these specific rules, the FCA also aims to introduce a general “anti-greenwashing” rule that would apply to all regulated firms, requiring their sustainability-related claims to be “clear, fair and not misleading”, echoing language used in the FCA’s cornerstone Conduct of Business regulations.

It is important to note that while the FCA has sought to align its proposals with the Sustainable Finance Disclosure Regulation (SFDR) in the European Union (EU) and proposals by the Securities and Exchange Commission (SEC) in the United States (US), the consumer-focussed labelling regime and the disclosure requirements provide a different starting point.

The FCA has said it intends to publish its final rules and guidance on greenwashing in a Policy Statement by the end of June 2023, to take effect 12 months later. Further, while the proposals focus on asset managers and their UK-based fund products and portfolio management services, the consultation paper states that this is a starting point, with the FCA intending to “expand and evolve the regime” in the near future to cover overseas funds.

FCA ESG Committee: Appointment of Greenwashing Whistleblower

The FCA’s desire to combat greenwashing is also evidenced by a recent appointment to its new environmental, social and governance (ESG) Advisory Committee, which aims to provide guidance to the FCA board in executing its ESG-related responsibilities. In December 2022, Desiree Fixler, the whistleblower who exposed alleged greenwashing at German asset manager DWS, became the Committee’s newest member.

In 2021, Fixler was dismissed from her post as head of sustainability at DWS for publicly questioning the claim in its 2020 annual report that more than 50% of its assets under management were ESG-integrated. DWS are currently being investigated by the German and U.S. financial regulators for greenwashing.


In Canada, the practice of greenwashing, is illegal. The Competition Bureau of Canada (the “Bureau”) is the entity responsible for investigating greenwashing claims and ensuring relevant laws are followed. These relevant laws include: the Competitions Act, the Consumer Packaging and Labeling Act, and the Textile Labeling Act (“Relevant Laws”). During November 2021, the Bureau updated its old 2008 policies and practices surrounding greenwashing to reflect the latest standards surrounding Canada’s commitment to stop greenwashing. The Relevant Laws prohibit businesses from making false or misleading claims and require products to bear accurate and meaningful labelling information to help consumers make informed purchasing decisions. Courts can consider the ‘general impression’ a representation makes as well as its literal meaning in determining whether any Relevant Laws are broken.

Punishment for greenwashing can be severe in Canada. In January of 2022, Keurig Canada Inc. was fined CDN$3,000,000, by the Commissioner of Competition, for its misleading claims that its K-Cups could be recycled. Where an employee believes a business is engaging in deceptive or anti-competitive activities, such as greenwashing, they can report it to the Bureau. Whistleblowers rights, employment status and confidentiality are protected in Canada both under the Competition Act and the Canadian Criminal Code.


Whilst there are general laws in Singapore prohibiting false claims to consumers, there are currently no laws or regulations in Singapore that explicitly address the issue of greenwashing. However, in the finance field, the Monetary Authority of Singapore (MAS) and some organisations, including the major Singapore banks, are devising measures to address greenwashing and it is expected that there may be developments in the regulatory landscape in the near future.


Additional authors:

Matthew Loy - Trainee Solicitor, Massimo di Giovanni – Articling Student

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