FCA proposes extended sustainability framework to include PMs

April 23rd, 2024

The UK’s Financial Conduct Authority (FCA) has opened a consultation to extend the Sustainability Disclosure Requirements (SDR) to include portfolio managers.

The regulator said the proposed labelling and SDR for PMs would generally mirror the rules for asset managers. These rules were finalised in November.

The SDR is a series of rules and guidance to help consumers make informed decisions on sustainable investment products.

The rules are designed to combat greenwashing by introducing requirements for asset managers to use certain investment labels, including the sustainability impact, sustainability focus, sustainability improvers, and sustainability mixed goals label.

The proposed rules for PMs include product labels to help consumers understand what their money is being used for, ensure that portfolio management offerings that claim to be sustainable investments meet high standards and enhance trust in the market.

They would also introduce naming and marketing requirements so products can only be described as having positive outcomes on the environment and/or society when those claims can be backed up.

The FCA also confirmed its anti-greenwashing guidance ahead of its anti-greenwashing rule coming into effect on 31 May.

It said its latest Financial Lives survey found significant consumer interest in sustainable finance, as 81% of adults surveyed said they would like their investments to do some good as well as provide a financial return.

Sacha Sadan, director of ESG, FCA, said: “Consumers care about investing in products that have a positive impact on the planet and people. That’s why we want to boost the integrity of the market and ensure people can make informed decisions with their money.”

Last Updated: 23 April 2024