The new rules say claims published on the green goals of investment products and services should be “fair, clean and not misleading.”

The move is the first part of a wider package of FCA measures aimed at tackling greenwashing, with further rules coming into force at the end of July and in December.

Sacha Sadan, director of environmental, social and governance at the FCA, said: “These new rules will help people make informed decisions about their money.

“They should give greater faith that green investments people choose have been sold fairly and marketed accurately.”

Sonia Kataora, partner at independent consultancy Barnett Waddingham: "The FCA's new anti-greenwashing rules are definitely a step in the right direction to help give people the clarity they are seeking, but this shouldn't be a substitute for doing proper fund due diligence.

“The old saying is that you shouldn't invest in anything you couldn't explain to your granny! But given the new regulation only covers UK firms authorised by FCA, the full picture is still pretty murky for investors.”

She called on the regulator to consider more wide-ranging guidance to improve overall confidence in sustainable investing and better outcomes for investors.

Last month, the FCA released guidance and examples to help firms comply with the anti-greenwashing rule.

This included telling firms to think “carefully about whether they have the appropriate evidence to support their claims”.

A report from PwC and the UK Sustainable Investment and Finance Association (UKSIF) published yesterday set out recommendations on how firms could implement the new rules, saying they were left “very little time” to digest the finalised FCA guidance.

James Alexander, chief executive of UKSIF, said: “The rule is very wide in scope, and firms must work hard to ensure their organisations are communicating across different teams so that products are being labelled and marketed accurately to clients and consumers.

“Our sense is that this has been an administrative challenge, but one which firms recognise as important and valuable.”

Lindsey Stewart, director of investment stewardship research at Morningstar, said: “While this ultimately helps investors make the right choices to match their sustainability needs, compliance is proving to be a heavy lift for many providers.”

From 31 July asset managers will have to take on board new sustainability disclosure requirements and an investment product labelling system, which aims to help customers understand what their money is being used for.

The FCA will also introduce a naming and marketing requirement for asset managers from 2 December, which aims to ensure products cannot be described as having a positive impact on sustainability if they do not.

The FCA is also proposing to extend its anti-greenwashing labelling rule for sustainable investments to portfolio managers.

The proposed labelling and Sustainability Disclosure Requirements (SDR) for portfolio managers largely mirror those introduced for asset managers in November 2023. 

Last month the Personal Finance Society launched a new course designed to help Financial Planners and advisers adapt to social and regulatory expectations on sustainable investment.