FCA publishes Discussion Paper on Sustainability Disclosure Requirements

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04 Nov, 2021

The Financial Conduct Authority (FCA) has published Discussion Paper DP21/4 'Sustainability Disclosure Requirements and investment labels' (the DP).

The DP follows the publication of the Government’s Roadmap to Sustainable Investing in October 2021 which set out the government's ambitions on climate change and green finance and sets out how it will realise those ambitions.  Two initiatives, in particular, will require action from the FCA to implement them.  These are with respect to sustainability disclosure requirements (SDR's) (where companies, including listed issuers, assets managers and asset owners, will be required to report on their sustainability risks, opportunities and impacts and provide disclosures relating to the forthcoming UK Green Taxonomy) and sustainable investment labels (where certain investment products will be required to display a label reflecting their sustainability characteristics).  

The DP seeks initial views on the SDR disclosure requirements for asset managers and certain FCA-regulated asset owners, as well as the sustainable investment labelling system.  The FCA aims to consult in Q2 2022 on proposed new rules and will use the responses to the DP to develop its proposals.  The DP has a specific focus on:

  • sustainable investment labels;
  • consumer-facing disclosures for investment products; and
  • client- and consumer-facing entity- and product-level disclosures by asset managers and FCA-regulated asset owners.

The DP focuses on the elements of SDR relevant to firms involved in investment management and decision-making processes.  It will consider how best to introduce specific sustainability-related requirements for financial advisors in due course.

Responses to the DP are requested by 7 January 2022. 

The Discussion Paper is available on the FCA website. 

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