Digital Advisory & Compliance, Regulatory Watch, Regulatory WatchSFDR Reform Advances: The European Parliament Publishes Its Position on SFDR 2.0
The Financial Conduct Authority (FCA) has announced a delay in finalising the Sustainability Disclosure Requirements (SDR) for portfolio managers, moving beyond the previously set Q2 2025 deadline. This decision, announced on February 14, reflects the regulator's commitment to delivering comprehensive and effective sustainability disclosure requirements for the UK financial sector.
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The Financial Conduct Authority (FCA) has announced a delay in finalising the Sustainability Disclosure Requirements (SDR) for portfolio managers, moving beyond the previously set Q2 2025 deadline. This decision, announced on February 14, reflects the regulator’s commitment to delivering comprehensive and effective sustainability disclosure requirements for the UK financial sector.
The delay follows extensive industry feedback during the second half of 2024, where asset managers implementing SDR labels highlighted the need for process adjustments. The FCA emphasizes that this extension will ensure the delivery of high-quality regulations that serve both consumers and the financial sector effectively.
Some background on the SDR Regime
UK’s SDR has gone through an impressive evolution in the past few years since it was initially proposed by the Financial Conduct Authority (FCA) in November 2021. After a year-long consultation on the first draft, published by the FCA, the Final Policy Statement PS23/16 was officially announced on November 28, 2023 and introduced a new set of rules which included new requirements for sustainability-related disclosures on product- and entity-level, product labels as well as the anti-greenwashing and the naming and marketing rules.
This initial version was updated by the FCA 5 months later – on April 23, 2024, to provide some clarifications on the implementation of the requirements as well as a suggestion to broaden the scope of the Regime to include portfolio managers, as the initial implication of SDR focused on asset managers in the UK.
The next step included a consultation on the extension of SDR to portfolio management which was closed on June 14, 2024 and the initial expectation was to have FCA’s final statement on the possible update of the regulatory framework before the end of 2024. During the second half of 2024, we saw miscellaneous feedback from the UK Market and more specifically from multiple asset managers who were going through the process of obtaining an SDR label for their products. The feedback from the UK market highlighted both the multiple benefits of compliance and concerns over the need for further policy refinements to streamline the process.
In response, the FCA set a new deadline for publishing the final rules for portfolio managers in Q2 2025. Most recently, the FCA confirmed that it will extend this timeline further, delaying the publication of SDR requirements for portfolio managers beyond Q2 2025.
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