Legal & Regulatory News

FCA publishes final SDR rules with a fourth sustainable fund label and anti-greenwashing rule.

On 28 November 2023, the UK Financial Conduct Authority (FCA) published its Policy Statement on Sustainability Disclosure Requirements and investment labels. These rules are intended to ensure that investment products fulfil their description in order to increase trust and the ease of decision making for consumers. In the final publication, the FCA included a new investment label, ‘Sustainability Mixed Goals’ and an anti-greenwashing rule.

The anti-greenwashing rule will apply from 21 May 2024 to all FCA-authorised firms who make claims about the environmental and social characteristics of their products. It requires that these claims are fair, clear and not misleading.

The investment labels will initially apply to UK asset managers who are aiming to make a positive sustainability impact through their products. A minimum of 70% of investments must meet the qualifying criteria for the asset manager to apply one of the labels.

The four labels are:-

1. Sustainability Focus;
2. Sustainability Improvers;
3. Sustainability Impact; and
4. Sustainability Mixed Goals.

​The new label, Sustainability Mixed Goals, focuses on products with mixed strategies. This label is relevant to funds who invest across a range of assets, in recognition that their products have the potential to make a positive sustainability impact in the future. The change in language from ‘sustainable’ to ‘sustainability’ is also intended to demonstrate that products are progressing towards becoming more sustainable.

The consultation on the anti-greenwashing guidance will close on 26 January 2024.  The investment labels and accompanying disclosures regime will be applicable from 31 July 2024.

Click here to read the Policy Statement.