New Sustainability Disclosure Requirements Introduced
On Monday 2nd December 2024 the Financial Conduct Authority (FCA) introduced a new set of Sustainability Disclosure Requirements (SDR). The aim of these requirements is to prevent companies and financial institutes from greenwashing their products or services, and to improve Environmental, Social and Governance (ESG) transparency by regulating how financial products are named, labelled, and promoted.
Here are the changes you must be compliant with today:
‘Sustainable’ label on financial products
Financial products can only be described as ‘sustainable’ if they’ve met specific requirements.
These are the four new sustainability labels you can attach to products:
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- Sustainability Focus: Investments predominantly sustainable.
- Sustainability Improvers: Investments aimed at improving sustainability.
- Sustainability Impact: Investments with measurable positive impacts.
- Sustainability Mixed Goals: A blend of the above categories.
Website and marketing materials
Your website and marketing materials must meet new anti-greenwashing rules. You must avoid making exaggerated claims about your ESG credentials – including in the use of imagery – to ensure you’re not misleading consumers. For example, using an image of a rainforest on a product with minimal environmental benefits is now prohibited.
Disclosure obligations
Your products must meet diverse disclosure obligations under the new rules. This includes providing simplified sustainability information that’s easy for consumers, distributors and investors to understand.
Take action today!
To assist the FCA has published a list of examples of good practice in pre-contractual disclosures.
It’s vital that you are compliant from today. Failure to do so could see your business incur fines and sanctions, and well as damaging reputational harm.
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