Event Summary: The burden of being the only one in the room
August 1, 2024
How to avoid allegations of ‘washing’ one’s image.
August 3, 2024
Article by Aaminah Khan
What is greenwashing?
Greenwashing occurs when companies mislead their customers into believing that their products and policies are environmentally friendly when, in fact, they are not. Companies do this by stretching the truth through misleading information, reducing information, or making it hard for people to analyse.
The Financial Conduct Authority’s anti-greenwashing rule
The Financial Conduct Authority’s anti-greenwashing rule started on 31st May and applies to all regulated firms in the UK. It states that when firms reference the sustainability characteristics of a product or service they are offering, they must be clear and not intend to mislead others. The new rules require that claims are backed with evidence and give an accurate representation without being selective about which data is used. This data also must be continuously monitored and updated to match the sustainability of the products or services. It is vital that firms evaluate the sustainability characteristics of their products and services as well as review and update their documentation. Firms should also enhance systems, processes, and controls to embed the FCA’s new regulations into their work.
Greenwashing heavily impacts the legal sector, particularly with regulatory compliance. Lawyers will need to provide guidance to FCA-authorised companies to ensure that the marketing of their products or services is aligned with the FCA’s new policy on greenwashing. This could include providing guidance to such companies’ employees to ensure they understand the new regulations. Of course, some companies may face legal trouble due to greenwashing claims, so lawyers will play a heavy role in dispute resolution, defending against such claims for their clients.
As greenwashing becomes a growing trend in today’s world of business, it is likely that we will see law firms become more involved in issues related to this, as well as companies adjusting their processes due to the impact of the FCA’s new regulation.
