The Sustainable Disclosure Regulation is the FCA’s solution to the problem of greenwashing as a barrier to sustainable investment. It shows that the regulator acknowledges that investors attach significant importance to sustainability concerns when making investment decisions, but feel uncertain about the validity of such claims.
The proposal outlines a labelling and disclosure framework to increase trust in sustainable investments and curb the possible harm caused to retail investors by falsely labelled or unclear investment products. Under the suggested system, there are three labels: one for impact, a label requiring a minimum threshold for sustainability, and a sustainable improvers label meant for transitioning companies and stewardship funds.
Feedback on the consultation closed in January 2023, and the FCA had aimed to finalise and publish any rules by the end of the first half of 2023, however this has been pushed back to enable it to consider the significant response to its consultation of the new rules, which secured around 240 written responses.
The rules will now be finalised by Q3 2023
