The Financial Conduct Authority (FCA) has announced it will postpone the implementation of its sustainability disclosure requirements (SDR) for asset managers, as well as the introduction of ESG labelling rules for investment products.
The Financial Conduct Authority (FCA) had planned to issue a statement regarding the latest policy requirements during the first half of this year. But, the regulator has now decided to publish it in the third quarter instead, due to the need to assess feedback received during the previous consultation period on the new regulation.
“There is broad support for the proposed regime and outcomes we are seeking to achieve, and we have received rich, constructive feedback on some of the detail.” the FCA said in a statement.
“We are carefully considering the feedback to ensure that first and foremost the regime protects consumers, but also recognises and takes account of any practical challenges that firms may have.”
FCA continued, “A strengthened regulatory framework for these products will increase opportunities and competition in the market and help foster growth and the demand and supply of products that better suit consumers’ needs and preferences.”
The consultation period closed in January 2023 and since then, the FCA has reported around 240 written responses.
The Sustainable Disclosure Regulation (SDR) is the FCA’s solution to the problem of greenwashing as a barrier to sustainable investment. 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.
“We need robust standards for the UK to remain at the global forefront of sustainable investment. A strengthened regulatory framework for these products will increase opportunities and competition in the market and help foster growth and the demand and supply of products that better suit consumers’ needs and preferences.” said the FCA.
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