FAQs – FCA consultation on anti-greenwashing guidance, plus final rules on Sustainability Disclosure Requirements (SDR) and ESG product labels regime
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The FCA has issued the final version of its rules for stage one of the UK’s new Sustainability Disclosure Requirements or SDR, together with its new ESG product labelling regime. The rules are detailed and complex. The new rules include restrictions on how managers can use terms like ‘ESG’, ‘green’ or ‘sustainable’ in product names and marketing.
Alongside this, the FCA has issued a guidance consultation on its new anti-greenwashing rule. With these initiatives, the UK hopes to establish its credentials as a leading light on ESG and climate change, and a rival to the EU, already well down the track with its own ambitious proposals, including a consultation on SFDR 2.0.
The UK regime will only apply to UK fund managers for now, although a consultation on overseas retail funds sold into the UK is expected to follow, possibly with other consultations over time to extend the regime’s scope. The changes will come at a not insubstantial cost – in an updated cost analysis, the FCA has said the new regime will involve total one-off costs of c. GBP204.8m and new ongoing annual costs of c.GBP34.2m. Those are significant sums. This paper gives our views on certain FAQs – please get in touch if you also wish to see our full briefing on the new rules or our separate FAQs on the anti-greenwashing consultation.