FCA update on sustainability disclosure requirements (SDR) and investment labels

The FCA has updated its guidance on Sustainability Disclosure Requirements (SDR) and investment labelling, following the end of the recent consultation period in January. Key updates include the following:

• The FCA Policy Statement will be delayed until Q3 2023, with corresponding implementation dates "adjusted accordingly".

• The proposed anti-greenwashing rule (originally due to come into force from 30 June 2023) will now begin later in the year.

Adjustments to the criteria of the proposed rules are intended to ensure more funds can be included in the labelling system. The forthcoming Policy Statement will help to clarify the final FCA rules, and is likely to include:

• The FCA’s approach to marketing restrictions.

• Consideration for refining some of the specific criteria for the labels and clarifying how different products, asset classes and strategies can qualify for a label, including multi-asset and blended strategies.

• Confirmation that there will be no requirement for independent verification of labels.

• Clarification that there will be no prescribed channels for achieving sustainability outcomes for products using investment labels.

• Inclusion of a “place for all in-scope products within the overall package of measures". This includes products that don't qualify for a label but which have some sustainability-related characteristics.

• Continued engagement with DLAG and other stakeholders (including consumer groups).

The FCA added that it will also seek “international coherence with other regimes and will continue to consider how to further support compatibility”.