UK: FCA SDR investment labels and anti-greenwashing policy statement published

On 28 November 2023, the FCA published a policy statement (“PS”) with its final rules and guidance on its Sustainability Disclosure Requirements (SDR) and investment labels regime. The policy statement is also accompanied by a consultation on anti-greenwashing guidelines that will accompany the new anti-greenwashing rule introduced by the FCA under the SDR (which unlike the other SDR rules, will apply to all FCA regulated firms). 

The final rules are largely similar to the proposals the FCA had previously consulted on – and the FCA have made some helpful improvements based on industry feedback. In particular, a fourth label of “Sustainability Mixed Goals” has been introduced for multi-strategy products that didn’t neatly fit any of the other 3 labels and the previously broad naming and marketing rule has been relaxed (so that retail funds which don't qualify for a label are still able to use ESG terms in their names or marketing documents if certain conditions are met – which are akin to SFDR pre-contractual and reporting requirements). The final rules do not apply to overseas funds or separate account managers as yet – both of which we expect will be brought into scope at a later date (in the case of overseas funds, we expect this will be done as part of the UK’s overseas funds regime, “OFR”). Firms offering overseas funds will however be caught by the FCA’s anti-greenwashing rule and certain distributor related obligations.   

In terms of timing, the anti-greenwashing rule and guidelines will become effective from 31 May 2024 (rather than as of today as was initially expected). Meanwhile the implementation date for the SDR labelling and disclosure requirements will be staggered with in-scope firms able to use the labels from 31 July 2024. 

We will be hosting a webinar on Thursday 30 November to discuss the final SDR rules in detail between 3 – 4 pm GMT. You can register your interest here.

You can find our detailed client note on the FCA Policy Statement here.

Our detailed client note on the Anti-Greenwashing Guidelines Consultation can be found here.