Regulators urged to launch a greenwashing probe into UK’s banking giants

Make My Money Matter has urged the Financial Conduct Authority (FCA), Advertising Standards Authority (ASA) and Competition and Markets Authority (CMA) to launch an investigation into potential greenwashing at UK’s top high street banks.

Regulators urged to launch a greenwashing probe into UK’s banking giants

Late last week, the environmental group published a letter, urging the regulators to investigate five banking giants, including Barclays, HSBC, Santander, NatWest and Lloyds, for potential greenwashing.

The call is for an investigation into two issues: the mismatch between banks’ climate commitments and their financing of non-aligned companies, and the contrast between their prominent climate branding and the lack of transparency around their unsustainable activities, which could mislead the public.

The group is arguing that these two issues could lead the public to perceive major bank brands as more sustainable than they actually are, potentially resulting in greenwashing within the UK banking sector.

Last month, research from Banking on Climate Chaos revealed that global banks collectively provided $705.8bn to firms involved in the fossil fuel sector last year, bringing the total provided since the Paris Agreement on climate change was ratified in 2015 to almost $7trn.

Make My Money Matter’s chief executive Tony Burdon said: “Our five largest high street banks all financed companies involved in fossil fuel expansion in 2023, the hottest year on record.

“But we believe that their climate and sustainability statements create a situation where the public believes them to be more sustainable than they actually are. We look forward to hearing whether the regulators agree and what next steps they may take.”

The International Energy Agency (IEA) has recommended that, to give the best chance of the global energy system aligning with net-zero by 2050, the development of all new coal mines, coal mine extension schemes and upstream oil and gas projects with long lead times is halted as soon as possible.

FCA’s anti-greenwashing rules

The plea comes after new anti-greenwash guidelines and standards for asset managers from the FCA entered into force last week, aiming to protect consumers from misleading claims.

As part of the new standards, asset managers will now be required to adhere to the new Sustainability Disclosure Requirements (SDR) rules. These rules prohibit vague references to ‘sustainability’, ‘ESG’, or related terms in fund marketing.

Instead, asset managers will be required to provide ‘clear, complete’ information and select one of four specific fund labels. The labels are ‘Sustainability Focus’, ‘Sustainability Improvers’, ‘Sustainability Impact’ and ‘Sustainability Mixed Goals’.

Looking forward, the FCA is also consulting on extending SDR to portfolio managers.

Related news: UK FCA Implements Anti-Greenwash Guidelines for Asset Managers

Related feature: Climate communications: Why Olivia Colman’s Make My Money Matter campaign went viral

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