Claims, clarity and credibility

What does the FCA's Anti-Greenwashing Rule mean for UK-listed companies communications?

The Financial Conduct Authority's (FCA) Finalised Guidance on the Anti-Greenwashing Rule sets out strict criteria to ensure that sustainability claims by companies are honest and substantiated. For UK-listed companies on the London Stock Exchange (LSE), this guidance means that their corporate communications and annual reports must not only be accurate, but also transparent in presenting their environmental efforts. Let’s walk through what this looks like in practice, offering some clear, real-world examples of how companies can stay compliant.

Accuracy is non-negotiable. If a company reports a 25% reduction in carbon emissions, this statement needs to be backed up with concrete evidence such as emissions audits or validations from credible third parties. This is about avoiding the pitfalls of greenwashing by making claims that are not just hopeful but are rooted in real, measurable progress.

The clarity of the information presented is critical. Companies must steer clear of technical jargon that could obscure the real meaning of their sustainability efforts. For example, if a company claims to be "advancing towards zero waste," it should clearly define what "zero waste" means in their specific context, outline the strategies being used, and set a clear timeline for achieving these goals.

Transparency doesn’t stop at successes. It also involves openly discussing areas in which the company might not have met its sustainability goals. For instance, if a company has made strides in reducing water use but has seen a drop in recycling rates, both outcomes should be reported. This balanced approach ensures that stakeholders have a complete and honest picture.

It’s also important for companies to align their reporting with internationally recognised standards, such as those from the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB). This alignment helps ensure that the sustainability data presented is robust and comparable across the board. For example, reporting greenhouse gas emissions should follow the Greenhouse Gas Protocol to ensure accuracy and comparability while supporting SASB and TCFD and forming the backbone of your Science Based Target Initiatives.

The choice of visuals and the framing of comparative claims must be handled with care. If a report features images of reforested areas to highlight biodiversity efforts, these images should accurately reflect the actual work done and not embellish it. Any AI-generated imagery would be a big ‘no no’ within this visual narrative space. Similarly, claims of having the most sustainable product on the market need a clear basis for comparison, ensuring that they are fair and meaningful.

Keeping sustainability information up to date and relevant requires ongoing effort. Regular sustainability audits and feedback mechanisms can help companies keep their data fresh and reflective of current conditions. This continuous loop of feedback and updates is key to maintaining compliance with the anti-greenwashing rule.