The Financial Conduct Authority (FCA) has delayed the implementation of its Sustainable Disclosure Requirements (SDR).
This broad-brush ‘anti-greenwashing rule’ was set to come into force on 30 June while the labelling and disclosures reforms were slated for 2024, but these could both be pushed back due to the “significant response” to the regulator’s SDR consultation paper.
The consultation closed on 25 January 2023 with around 240 written responses. “To take account of the significant response, we intend to publish the policy statement in Q3 this year, and the proposed effective dates will be adjusted accordingly,” it said.
The statement will give the market the closest representation of the FCA’s final rules.
The areas for inclusion are marketing restrictions, refining some of the specific criteria for labels and clarifying how different products, asset classes, and strategies can qualify for a label.
A key criticism of the proposal was a lack of consideration for multi-asset and blended strategies, which will now be factored in by the autumn.
The regulator will also clarify grey areas such as primary and secondary channels for achieving sustainability outcomes not being required, and that independent verification of a product’s categorisation is not warranted to qualify for a label.
The FCA had been criticised by the Treasury Sub-Committee for Financial Services Regulation earlier this year for a lack of detail regarding international operability.
The UK watchdog said, “there will be a place” in the policy statement for products that may not qualify for labels, but still have some “sustainability-related characteristics.”
It said it will “consider how to further support compatibility, while emphasising that we need robust standards for the UK to remain at the global forefront of sustainable investment.”
Gemma Woodward, head of responsible investment at Quilter Cheviot said: “Given the complexity of the topic and the scale of the response from the industry, it is good to see the FCA take its time with its policy statement on the Sustainability Disclosure Requirements.
There is a mass of sustainable and responsible regulation being introduced just now, so it is important firms are given the time to plan and resource effectively and make the new policies a success.”
She hopes however, that the policy statement will be” crystal clear on what constitutes marketing.
She continued: “The FCA initially said it would prohibit firms from using certain terms in the naming and marketing of non-labelled products.
As a result, there is a concern that things such as Stewardship Code responses or voting and engagement reports are deemed to be marketing documents and thus cannot be used in conjunction with non-labelled products, even if voting and engagement is going on under the bonnet.”
©Markets Media Europe 2023
