The FCA has issued a discussion paper seeking views on proposed new sustainability disclosure requirements and a sustainability labelling system.
Further to the government's Roadmap to Sustainable Finance (see our briefing), on 3 November 2021 the FCA published a discussion paper (DP21/4) on Sustainability Disclosure Requirements (SDR) and investment product labels.
The FCA envisages a three-tiered system with different levels of disclosures targeted at different types of investors. The discussion paper also includes the FCA's proposals for the classification of products according to their sustainability activities and objectives.
The FCA proposes that asset managers and certain FCA-regulated asset owners should be in scope of the new disclosure rules. It tentatively suggests coverage similar to that proposed for its new TCFD reporting regime, but is open to alternative suggestions. The FCA says that it is also considering whether to introduce specific sustainability-related requirements for financial advisers and how (if at all) the regime should apply to funds that are being marketed into the UK.
The deadline for providing comments is 7 January 2022 and a consultation is expected in Q2 2022.
We set out a high-level overview of the proposals and our initial thoughts below – including the interaction with other non-UK initiatives.