FCA Consultation Paper on UK Sustainability Disclosure Requirements (SDR) The UK Financial Services “FCA” published its long-awaited consultation paper in October and in relation to the proposed UK Sustainability Disclosure Requirements “SDR” and investment labels regime. It is designed to tackle greenwashing and retain trust in sustainable products and is largely a tailored response to the EU’s Sustainable Finance Disclosure Regulation and Taxonomy. The FCA’s proposals build from the early views set out in its Discussion Paper on Sustainability Disclosure Requirements and investment labels DP, published last November, focusing on the following core areas: sustainable investment labels, qualifying criteria that firms must meet to use a label, product- and entity-level disclosures, and naming and marketing rules. The UK s financial watchdog also unveiled a raft of new measures to tackle greenwashing in its consultation on Sustainability Disclosure Requirements. The new proposals aim to redefine how terms like ‘ESG, ‘green or ‘sustainable can be used to protect consumers and improve trust in sustainable investment products. The SDR consultation comes after the industry had been crying out for greater clarity on regulatory expectations in the face of the rapid growth The FCA notes that the proposals in this consultation paper are a starting point for a regime that will expand and evolve over time. Equally, the SFDR was introduced by the European Commission in March and imposes mandatory ESG disclosure obligations on asset managers. The key requirements of the disclosures are that firms adopt one of three different product categorisations: Article 6, Article 8, or Article 9. The main differentiator with SDR is that it is a labelling regime, not a disclosure regime, the FCA has said. If products do not meet the qualifying criteria under the FCA s proposals, they will not be able to use any of the regulator s sustainable investment labels. Sustainable investment labels help consumers navigate the investment product landscape and enhance consumer trust.
FCA Consultation Paper on UK Sustainability Disclosure Requirements (SDR)
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