Legal & Regulatory News

FCA issues consultation on sustainability disclosure requirements and investment labels

25 October 2022

On 25 October 2022, the UK Financial Conduct Authority (FCA) published a consultation paper (CP22/20) (the Consultation) on the introduction of sustainability disclosure requirements (SDR) and investment labels.

The FCA's proposals set out in the Consultation include the introduction of a number of measures aimed at preventing greenwashing, including:

  • sustainable investment product labels, including three broad categories (sustainable focus, sustainable improvers, and sustainable impact);
  • naming and marketing rules that will restrict the use of sustainability-related terms such as "ESG", "green" or "sustainable" for the use in product names and marketing of financial products;
  • consumer-facing product-level disclosures that will aid consumers seeking to understand the related features of an investment;
  • detailed disclosure requirements that will include more granular information necessary for investors to make appropriate decisions; and
  • requirements for distributors of products to ensure that any labelling is clear for consumers.

The core rules – labelling and classification, disclosure and naming and marketing rules – will apply to asset managers initially. However, the FCA are also seeking views on expanding the regime to FCA-regulated asset owners in respect of their investment products.

The deadline for responses to the Consultation is 25 January 2023, with the FCA aiming to publish the final rules and guidance in a policy statement by June 2023.

Click here to view the Consultation.

Click here to respond to the Consultation.