Sustainability disclosures and investment labelling – the FCA delays

On 4 July 2022, the FCA updated the “next steps” section of its webpage on sustainability disclosure requirements (SDR) and investment labels (DP21/4) to announce that it now plans to consult on policy proposals in autumn 2022 rather than in Q2 2022.

DP21/4 sought initial views on SDR for asset managers and certain FCA-regulated asset owners and a new labelling system for sustainable investment products. It closed to responses in January 2022.

Why the delay?

The FCA says that the consultation is being delayed to allow time to take account of other international policy initiatives and to ensure stakeholders have time to consider these issues.

DP21/4 was published alongside, and forms part of, the FCA's "Strategy for positive change: our ESG priorities". Please see our separate note which summarises this strategy.

Overview of DP21/4

Published on 3 November 2021, DP21/24 sets out the FCA’s proposal to establish a three-tiered product labelling and sustainability disclosure regime:

1. Product label; a standardised product classification and labelling system.

2. Consumer-facing disclosures; containing key product-level information in the form of standardised information on the product's key sustainability attributes.

3. Detailed disclosures at product and entity level; on sustainability risks, opportunities and impacts. This is more granular information intended for institutional investors and other stakeholders.

The third limb (entity and product level disclosures) is intended to build on the FCA's proposals for TCFD-aligned climate-related disclosures requirements, as set out in CP21/17.