UK sustainability disclosure and investment labelling – a client note

As we reported at the time, on 25 October 2022, the FCA published CP22/20 (the CP), with its long-awaited proposals for a new sustainability disclosures and investment labelling regime.

The CP builds on the November 2021 Discussion Paper (DP21/4) that set out the FCA’s initial views on its approach to regulation of sustainable funds and disclosures.

Our client note summarises the FCA’s proposals and will be of interest primarily to UK FCA regulated firms that carry on investment management activities (including MiFID portfolio managers, AIFMs and UCITS ManCos).

Next steps

The consultation period closes on 25 January 2023.

The FCA intends to publish final rules by the end of the first half of 2023, although the final labelling, naming and marketing and initial disclosure requirements would not come into effect until at least 30 June 2024.

However, the proposals also include a general ‘anti-greenwashing’ rule, which would apply to all regulated firms, requiring sustainability-related claims to be clear, fair and not misleading. This rule would come into effect immediately on the publication of the FCA’s Policy Statement.

The CP’s proposals focus on funds and portfolio management based in the UK but the FCA notes that it will “build on the proposals in this paper” through further consultations in due course, with a view to expanding scope of the regime to include overseas and pension products.