FCA proposes UK Sustainability Disclosure Requirements and investment labels


On 25 October 2022, the Financial Conduct Authority (“FCA”) published its Consultation Paper CP22/10 (“Consultation Paper”) on the Sustainability Disclosure Requirements (“SDR”) and investment labels. The FCA’s proposals aim to build transparency and trust by introducing: labels to help the consumer navigate the market for sustainable investment products; sustainable related terms, ensuring the naming and marketing products are proportionate to the sustainability profile of the product; disclosure requirements, which include accessible consumer-facing disclosures, and detailed product-and entity-level disclosures and anti-greenwashing rule stating that sustainability related claims must be clear, fair, and not misleading. Firms and products in scope of the new proposals include all FCA-regulated firms and asset managers. The proposals in the Consultation Paper will focus on funds and portfolio management based in the UK as the SDR rules (for now) are applicable to UK products only.


Sustainable investment labels:

  1. Sustainable Focus: products with an objective to maintain a high standard of sustainability in the profile of assets by investing to meet a credible standard of environmental and/or social sustainability, or products that align with a specified environmental and/ or social sustainability objective.
  2. Sustainable Improvers: products with an objective to deliver measurable improvements in the sustainability profile of assets over time.
  3. Sustainable Impact: products with an explicit objective to achieve a positive, measurable contribution to sustainable outcomes.

Consumer-facing disclosures (product-level): a summary of the products’ key sustainability-related features, helping consumers to better understand those features, compare similar products or the same product over time, and hold the provider to account for its sustainability claims.

Detailed Disclosures (product-level):

  • Pre-contractual disclosures (Part A): sustainability related information must be disclosed both for products which use a label and for products that do not use a label, but which have sustainability-related features.
  • Ongoing sustainability products reports (Part B): firms produce disclosures on the sustainability-related performance of their products on an ongoing basis, in a dedicated sustainability product report which builds from the Task Force on Climate-Relate Financial Disclosures (“TCFD”) product report.

Entity-level disclosures: a ‘sustainability entity report’ on how firms are managing sustainability-related risks and opportunities. These disclosures must be made regardless of whether an in-scope firm uses a label.

Naming and marketing rules: different categories of labels will help consumers distinguish between different types of sustainable investment products and find products that meet their preferences. These requirements will apply to all investment products and their communications and marketing.

A general ‘anti-greenwashing’ rule: all regulated firms to ensure that the naming and marketing of financial products and services in the UK is clear, fair, and not misleading and consistent with the sustainability profile of the product or service i.e., proportionate and not exaggerated.


The Consultation period ends on the 25 January 2023, and the policy statement is expected to be published by 30 June 2023. Once the FCA publishes the rules, regulated firms will have to update their fund documentation and prepare disclosures in line with the SDR rules.

To read the full Consultation Paper click here.

We will be following the SDR proposals closely; look out for our newsletter and a handy print and keep guide.

For more information on the implementation of UK SDR, Cleveland & Co External in-house counsel™, your specialist outsourced legal team, are here to help.

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