Understanding the FCA's sustainability disclosure requirements and investment labels | LIBF Webinar

The FCA have issued their consultation paper CP22/20 on their proposals for sustainability disclosure requirements (SDR) and investment leads.

This proposal intends to advance the FCA's strategic objectives to:

make markets function well
operational objectives to protect consumers and enhance market integrity
increasing transparency on the sustainability profile of products and firms
risk the harm arising from greenwashing

The aim of the proposed classification and labelling regime is to help consumers navigate the market for sustainable investment products, to distinguish between:
products based on their sustainability characteristics, themes, and outcomes
different types of sustainable investment product

Sustainable investment products are structured around or pursue sustainability related characteristics, themes, or outcomes, while providing a financial return to investors. Consumer demand for these products is growing rapidly.

The FCA's latest Financial Lives survey shows that 81% of adults surveyed would like the way their money is invested to do some good as well as provide a financial return.

Firms are responding to this demand, according to Investment Association (IA) the UK market for UK domiciled responsible investment funds grew 64% over 2021 to reach £79 billion, far outstripping the 11% growth in UK domiciled funds overall.

However, consumers must be able to trust sustainable investment products and reasonably expect these products to contribute to positive environmental or social outcomes.

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