The FCA’s long-awaited regime seeks to raise standards, increase consumer understanding, and reduce instances of greenwashing.
By Paul A. Davies, Laura N. Ferrell, Sarah E. Fortt, Nicola Higgs, Betty M. Huber, James McCrory, Nell Perks, Michael D. Green, Clare Scott, James Bee, Anne Mainwaring, Jaime Martin, Ella McGinn, and Charlotte Collins
On 28 November 2023, the FCA published its Policy Statement (PS23/16) containing final rules on its Sustainability Disclosure Requirements (SDR) and investment labelling regime. The FCA originally consulted on this regime in October 2022 (see this Latham blog post). Publication of the final rules was somewhat delayed in light of the volume of feedback received to the consultation.
The FCA is introducing the following key measures:
- An anti-greenwashing rule for all UK authorised firms to ensure that sustainability-related claims are fair, clear, and not misleading
- An investment labelling regime for UK asset managers, comprising four investment labels that may be used for products that seek to achieve positive sustainability outcomes
- New rules and guidance for UK asset managers that market investment funds on the basis of their sustainability characteristics, but which do not use a label
The FCA is also setting consumer-facing disclosure requirements, product- and entity-level disclosure requirements, and requirements for UK distributors to ensure that product-level information is made available to retail consumers. The FCA notes that it plans to consult on extending the regime to portfolio management products and services in early 2024. HM Treasury is also exploring how to apply the regime to overseas funds.
Read more in this Client Alert.