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On 28 November, the UK's Financial Conduct Authority (FCA) published its Policy Statement on SDR (PS23/16 “Sustainability Disclosure Requirements (SDR) and investment labels“).

The Policy Statement covers investment labels, naming and marketing requirements as well as requirements for distributors in addition to the anti-greenwashing rule.

Commenting from the perspective of asset managers, partner Shantanu Naravane says:

"More than two years after the initial Discussion Paper, the UK's sustainability disclosure standards and investment labels published earlier today are one of the most eagerly anticipated pieces of regulation in recent memory.

While there is a lot of detail to be unpacked, the rules appear to be largely consistent with market expectations. Significantly, asset managers will now be able to market funds with sustainability characteristics to retail investors even where they do not use the investment labels (subject to meeting some qualifying conditions).

As expected, the final rules follow a very different approach to the EU ESG regime, which will be welcomed by market participants. It now appears more likely that any convergence will take the form of the EU aligning itself to the UK than vice versa."

Commenting from the perspective of regulated firms and distributors that make sustainability related claims, partner Marina Reason says:

"The introduction of the anti-greenwashing rule will be relevant to all firms that make sustainability-related claims in respect of products and services. Such firms will need to work through their marketing materials and other communications to ensure these are in line with the new expectations. Policies and procedures will need upgrading and staff will need training. The standard of "fair, clear and not misleading" communications which underpins the anti-greenwashing rule will be familiar from the financial promotions regime, but the sustainability overlay will add complexity and challenges. In addition to the anti-greenwashing rule, we also have new requirements for distributors to pass-on the sustainability label and consumer-facing disclosures to consumers. Distributors will therefore also need to augment their distribution arrangements to ensure that they can obtain the information from the manager.

There are some key challenges which firms need to address in implementing the anti-greenwashing rule. For example, timing will be very tight as the rule will apply from 31 May 2024. It will therefore be prudent for firms to commence implementation now, but the Guidance is still in consultation so certainty of regulatory approach will be a challenge. In addition, in the absence of a UK taxonomy for what counts as sustainable, UK firms will need to think carefully about creating a reasonable and sufficiently robust approach in terms of level of due diligence they will carry out in particular for non-UK products which will not be subject to the wider UK sustainability requirements. Approach to communications in respect of unregulated products provided by UK regulated firms as well as divergent requirements flowing from EU (where the ESAs are also exploring anti-greenwashing) will also need to be carefully considered."

The SDR Policy Statement is accompanied by a Guidance Consultation, GC23/2 “Guidance on the Anti-Greenwashing rule”, which follows feedback from the industry for further guidance on the expectation on firms in respect of the anti-greenwashing rule. The FCA is consulting on the Guidance and the consultation closes on 26 January 2024.

For more information, please see our blog posts here - FCA publishes anti-greenwashing rule (and other measures) and We have lift-off! FCA publishes final rules on UK sustainability disclosure requirements and investment labels.

FTAdviser features comments from Shantanu and Marina in its article, 'Implementing SDR rules will have 'material cost' implications' and Law360 quotes the partners on this topic in two of its articles on financial regulation themes – 'UK Rewrites Financial Services Rules In Post-Brexit Reset' quotes Shantanu and 'Finance Watchdog To Showcase Consumer Protection In 2024' quotes Marina.

Comments from Shantanu on the new rules also featured in Net Zero Investor's article 'UK investment community embraces FCA’s new sustainability labelling regime' and The Drawdown's article 'The UK’s nice green labelling machine'.

Key contacts

Shantanu Naravane photo

Shantanu Naravane

Partner, London

Shantanu Naravane
Marina Reason photo

Marina Reason

Partner, London

Marina Reason

Media contact

For further information on this article please contact

Kath Walkling

Communications Manager


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