02 Feb 2024

The FCA have introduced a sustainability disclosure and labelling regime. More details can be found on the dedicated  FCA webpage about the regime. Also, please find below details of the Sustainability Disclosure Requirements (SDR) and investment labels consultation and policy statement.

FCA Policy Statement

On 28 November 2023, the FCA published their Policy Statement (PS23/16) on Sustainability Disclosure Requirements (SDR) and investment labels

Implementation timetable

31 May 2024: Anti-greenwashing rule and guidance implemented

31 July 2024: Labels can be used from this date

2 December 2024: Naming and marketing rules come into force

2 December 2025: Product-level and entity-level disclosures for firms with AUM>£50bn

2 December 2026: Entity-level disclosure rules extended to firms with AUM>£5bn

Who do the rules apply to?

The anti-greenwashing rule applies to all FCA-authorised firms who make sustainability-related claims about their products and services. The FCA consulted until 26 January 2024 on guidance for the anti-greenwashing rule. AREF's response can be found here.

The investment labels, disclosure, and naming and marketing rules apply to UK asset managers. Also, there are targeted rules for the distributors of investment products to retail investors in the UK.

The rules do not apply to portfolio management products and services yet. The FCA will consult further on an alternative approach to applying the regime to all types of portfolio managers. In the medium term, the FCA will consider extending the regime to pension products too.

Investment Labels

The FCA have sought to accommodate different asset classes and strategies in the labelling regime, including real estate. 

A fourth label, Sustainability Mixed Goals, has been introduced to accommodate funds that invest across the other sustainable strategies.

If a firm chooses to label a product, the firm remains responsible for its classification and ensuring the label is appropriate. The FCA’s Fund Authorisation team will review, and may challenge, the application of any new fund submitted for authorisation, or amendments to existing funds. However, this will not be an approval of the label.

A full overview of SDR and the labelling regime can be found in Annex 2 of the Policy Statement. At the suggestion of AREF and other real-estate related associations, an example of a real estate fund has been given for the Sustainability Focus and Sustainability Impact labels.

Naming and marketing

The FCA have made some amendments to the proposals in the consultation so that firms can continue to use sustainability-related terms in product names and marketing (i.e. financial promotions) if they use a label or if they meet the product name, disclosure and statement conditions outlined in the Policy Statement.


Firms must produce a clear, concise consumer-facing disclosure for products with a label and/or products using sustainability-related terms without a label.

The FCA have not amended their requirements relating to data. Firms using labels must take reasonable steps to ensure the data used for KPIs is accurate and complete. The FCA will however consider updating product level disclosure requirements in line with UK and international developments, such as the UK Green Taxonomy and future ISSB standards.

The FCA believe the entity-level disclosure requirements to be a starting point, setting the direction of travel from climate to wider sustainability related reporting. They are encouraging the development of industry-led guidance which further specifies the types of information that may be useful for asset managers to disclose. The FCA have referenced the International Sustainability Standards Board (ISSB), Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) standards as documents to consider when firms are determining the content of their disclosures. Other frameworks, such as the Taskforce on Nature-related Financial Disclosures (TNFD) may also be useful.

Support from AREF

AREF's Public Policy Committee and ESG & Impact Investing Committee will be considering the affect of the SDR and investment label regime on AREF's members. They will provide material and lead on events to educate and assist our members.

The ESG Metrics for Real Estate paper is currently being reviewed and updated accordingly. The new version will be shared with AREF members.

Financial Services and Markets Act 2000

The House of Lords made some amendments to the the Financial Services and Markets Bill 2022-23 relating to sustainability disclosure requirements (SDR).

New sections 416A and 416B have been introduced to the Financial Services and Markets Act 2000 (FSMA):

  • the government will have the authority to make and revise disclosure requirements in connection with sustainability via an “SDR policy statement”; and
  • the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) will be obliged to have regard to the SDR policy statement when making rules or issuing guidance relating to sustainability disclosure.

Sustainability includes matters relating to the environment (including climate change); social, community and human rights issues; and issues related to tackling corruption and bribery.

The Financial Services and Markets Bill received Royal Assent on 29 June 2023.

Update from FCA - March 2023

On 29 March 2023, the FCA provided an update on their review of the feedback they had received to their proposals in CP22/20 on Sustainability Disclosure Requirements (SDR) and investment labels.

To take account of the significant response the FCA received to the consultation, they intend to publish the Policy Statement in Q3 2023, which is later than originally planned, and the proposed effective dates will be adjusted accordingly.

While reviewing the feedback, the FCA are considering their approach to the marketing restrictions, refining some of the specific criteria for the labels and clarifying how different products, asset classes and strategies can qualify for a label, including multi-asset and blended strategies.

When they publish the Policy Statement, they will also clarify matters such as that primary and secondary channels for achieving sustainability outcomes are not prescribed, and that they do not require independent verification of product categorisation to qualify for a label.

The FCA have confirmed that there will be a place for all in-scope products within the overall package of measures. They agree it is important that consumers can navigate to those products that meet their needs and preferences. This includes products that may not qualify for a label, but nevertheless have some sustainability-related characteristics.

They have sought international coherence with other regimes and will continue to consider how to further support compatibility, while emphasising the need for robust standards for the UK to remain at the global forefront of sustainable investment. The FCA believe that 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 FCA will continue to engage with their Disclosures and Labels Advisory Group and other stakeholders, including consumer groups.

Consultation Paper

AREF submitted a response in January 2023 to the FCA consultation (CP22/20) on Sustainability Disclosure Requirements (SDR) and investment labels.

The consultation set out the core elements of the regime and initially focussed on UK-based funds and portfolio management. The FCA intends to follow up with a consultation on expanding the scope to overseas products, and further consultations over time to extend the scope and content of the regime.

There were three categories of labels proposed for sustainable investment products:

  • Sustainable Focus - for products investing in assets that are environmentally or socially sustainability;
  • Sustainable Improvers - for products investing in assets to improve the environmental or social sustainability over time, including in response to the stewardship influence of the firm; and
  • Sustainable Impact - for products investing in solutions to environmental or social problems to achieve positive, measurable real-world impact.

The proposals weren informed by several inputs including industry feedback to DP21/4 (see more about the discussion paper below) and consumer research, which the FCA published alongside the consultation.  The FCA also sought independent advice from their Disclosures and Labels Advisory group made up of key financial market stakeholders and subject matter experts.

AREF participated in a SDR Working Group, with other real estate related associations, to produce a guidance response to CP22/20. We used this as the basis for AREF's response to CP22/20. 

The paper on ESG Metrics for Real Estate, referred to in the guidance response, was updated on 13 January 2023. We hope members find this useful in terms of current thought-leadership on ESG metrics for real estate.

AREF’s ESG Disclosures Working Group assisted with AREF's response to CP22/20 and this was overseen by AREF's Public Policy Committee and ESG & Impact Investing Committee

Webinar: "How will SDR affect real estate?"

AREF held a webinar "How will SDR affect real estate?" on 25 November 2022, with speakers Louisa Chender, ESG Policy & Advisory, FCA; Georgie Nelson, Head of ESG Real Estate, abrdn; and moderated by Melville Rodrigues, Head of Real Estate Advisory, Apex Group & member of AREF's Public Policy Committee.  Click here to view or click the button below.

Discussion Paper

The consultation followed on from the FCA's discussion paper (DP21/4) on Sustainability Disclosure Requirements (SDR) and investment labels that the FCA published in November 2021,

In this discussion paper, the FCA sought initial views on SDR disclosure requirements for asset managers and certain FCA-regulated asset owners, as well as the sustainable investment labelling system. Their aim is to build trust in the market, enhance transparency in the interest of consumers (defined in the paper as end-consumers such as pension scheme members, retail investors etc) and meet certain information needs of institutional investors. 

AREF’s ESG Disclosures Working Group drew up AREF’s response to DP21/4. This was overseen by AREF’s Public Policy and ESG & Impact Investing Committees.


Jacqui Bungay

Jacqui Bungay

Head of Policy and Company Secretary, AREF

Jacqui is AREF’s Company Secretary and provides policy guidance and secretariat services to AREF’s Board and Management Committee as well as many of AREF's committees and working groups.

Jacqui joined AREF in 2014 after working for over 25 years in fund compliance, client relationships and administration in the trustee and depositary sector.