ESG: UK SDR – Simmons responds to the FCA’s consultation paper

In October 2022, the FCA published CP 22/20, “Sustainability Disclosure Requirements (SDR) and investment labels”.

As our client note on the FCA’s proposals mentions, the CP covered a broad range of areas, including

• Sustainable investment labels
• Consumer-facing product-level disclosures
• Detailed pre-contractual disclosures
• On-going reporting
• Entity level disclosures
• Naming and marketing rules
• Anti-greenwashing rule
• Requirements for distributors

Simmons has submitted a response to CP 22/20 to the FCA and this can be found here.

As our client base will hold a variety of views on the FCA’s proposals, we have kept our response ‘policy neutral’. Instead, we look to focus on improving the drafting where we consider some points are potentially ambiguous or do not seem to fully achieve the FCA’s intentions.

Next steps

The consultation period under CP 22/20 ran to 25 January 2023.

The FCA intends to publish a Policy Statement, containing final rules by the end of the first half of 2023.

The proposed general ‘anti-greenwashing’ rule, which would apply to all regulated firms, requiring sustainability-related claims to be clear, fair and not misleading will come into effect immediately on the publication of the Policy Statement.

However, the final labelling, naming and marketing and initial disclosure requirements would not come into effect until at least 30 June 2024.

The CP’s proposals focus on funds and portfolio management based in the UK but the FCA noted, in CP 22/20, that it will consult further in due course, with a view to expanding scope of the regime to include overseas and pension products.