FCA Sustainability Disclosure Requirements and Investment Labels

Executive Summary

The UK Financial Conduct Authority (FCA) published new rules – the Sustainability Disclosure Requirements and investment labels regime – in November 2023 to help investors navigate the investment product landscape and to protect them from greenwashing.

The regulations cover product labels, naming and marketing requirements, disclosures, rules for distributors and a broad anti-greenwashing rule for all authorised firms. Product labels for sustainable products are optional and are expressly not a disclosure regime. The labels are designed to cover different investment profiles and include the following:

Sustainability Focus
Sustainability Improver
Sustainability Impact
Sustainability Mixed Goals

The FCA has also published non-handbook guidance to accompany the anti-greenwashing rule. The guidance has applied since 31 May 2024 and at the same time as the anti-greenwashing rule.

Adam Jacobs-Dean

Managing Director, Global Head of Markets, Governance and Innovation
Thomas Sharpe

Associate Director, Markets, Governance and Innovation

Practical Implications

In-scope firms need to review their current products that are marketed as “sustainable” to ensure they meet the criteria of the investment label and naming and marketing rules. This may involve making changes to products in order to ensure that they qualify. Sustainable products will also need a sustainability objective. Firms should consider whether they have the processes in place to ensure compliance.

Timeline

AIMA has categorized this regulation as Medium Priority/Medium Impact and it is therefore represented in mid-dark blue in the AIMA Regulatory Horizon Scan gantt chart.

Timeline and summary of past changes

Authority	Rule Change	Effective date	Categorisation	Resources
FCA	Anti-greenwashing requirement	31 May 2024	Medium Priority Medium Impact	FCA Finalised non-handbook guidance rule
FCA	For firms using product labels: Sustainable product labels, naming and marketing rules, consumer-facing and pre-contractual disclosure requirements	31 July 2024	Medium Priority Medium Impact	FCA Policy Statement
FCA	For distributors: product label and consumer-facing disclosure requirements	31 July 2024	Medium Priority Medium Impact	FCA Policy Statement
FCA	For distributors: notice on overseas funds	2 December 2024	Medium Priority Medium Impact	FCA Policy Statement
FCA	For firms not using product labels but using sustainability terms in names and marketing: naming and marketing rules, consumer-facing and pre-contractual disclosure requirements	2 December 2024	Medium Priority Medium Impact	FCA Policy Statement
FCA	For firms not using product labels but using sustainability terms in names and marketing: first ongoing sustainability performance related product-level disclosures	12 months after first use	Medium Priority Medium Impact	FCA Policy Statement

Timeline and summary of upcoming changes

Authority	Rule Change	Effective date	Categorisation	Resources
FCA	For firms using product labels: first ongoing sustainability performance-related product-level disclosures	31 July 2025	Medium Priority Medium Impact	FCA Policy Statement
FCA	For firms using product labels: first on-demand ongoing sustainability performance-related product-level disclosures	2 December 2025	Medium Priority Medium Impact	FCA Policy Statement
FCA	For firms with more than £50 billion AUM: first entity-level disclosures	2 December 2025	Medium Priority Medium Impact	FCA Policy Statement
FCA	For firms with between £5 billion and £50 billion AUM: first entity-level disclosures	2 December 2026	Medium Priority Medium Impact	FCA Policy Statement

Changes under consideration

April 2025 update: The FCA consulted on extending the SDR and Investment Labels regime to portfolio managers in 2024. The FCA has now said, however, that it will not proceed with the extension of SDR at the current time. It will instead focus on how firms are applying the Consumer Duty.

~~Timeline and summary of changes under consideration~~

~~FCA~~	Extending the SDR to portfolio management: labelling, naming and marketing, associated consumer-facing and pre-contractual disclosures	~~Policy statement and information about implementation expected Q2 2025~~	~~Medium Priority Medium Impact~~	~~FCA Consultation Paper~~
~~FCA~~	Extending the SDR to portfolio management: first ongoing sustainability performance related product-level disclosures for firms not using product labels but using sustainability terms in names and marketing	~~Policy statement and information about implementation expected Q2 2025~~	~~Medium Priority Medium Impact~~	~~FCA Consultation Paper~~
~~FCA~~	Extending the SDR to portfolio management: first ongoing sustainability performance-related product-level disclosures for firms using product labels	~~Policy statement and information about implementation expected Q2 2025~~	~~Medium Priority Medium Impact~~	~~FCA Consultation Paper~~
~~FCA~~	Extending the SDR to portfolio management: first on-demand ongoing sustainability performance-related product-level disclosures for firms using product labels	~~Policy statement and information about implementation expected Q2 2025~~	~~Medium Priority Medium Impact~~	~~FCA Consultation Paper~~
~~FCA~~	Extending the SDR to portfolio management: first entity-level disclosures for firms with more than £50 billion AUM	~~Policy statement and information about implementation expected Q2 2025~~	~~Medium Priority Medium Impact~~	~~FCA Consultation Paper~~
~~FCA~~	Extending the SDR to portfolio management: first entity-level disclosures for firms with between £5 billion and £50 billion AUM	~~Policy statement and information about implementation expected Q2 2025~~	~~Medium Priority Medium Impact~~	~~FCA Consultation Paper~~

Upcoming consultations

The previous Government had separately stated that it would publish a consultation on the application of SDR and the Investment Labels regime to Overseas Fund Regime funds in Q3 2024. Following the change to a new Government, this did not take place.

Timeline and summary of upcoming consultations

HMT	Government consultation on the application of SDR and investment labels to Overseas Funds Regime funds	Had been expected Q3 2024 but not published. No further information as of Q2 2025.	Medium Priority Medium Impact	FCA Roadmap
FCA	FCA consultation on rules and guidance related to application of SDR to Overseas Funds Regime funds	2025 publication had been expected following Government consultation. No further information as of Q2 2025.	Medium Priority Medium Impact	FCA Roadmap