The Financial Conduct Authority (FCA) in the UK announced on September 9, 2024 that it is offering managers of UK-based funds more flexibility in applying the “naming and marketing” rules as part of the Sustainability Disclosure Requirements (SDR) and investment labels, which were officially announced on November 11, 2023.
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The Financial Conduct Authority (FCA) in the UK announced on their website on September 9, 2024 that it is offering managers of UK-based funds more flexibility in applying the “naming and marketing” rules as part of the Sustainability Disclosure Requirements (SDR) and investment labels, which were officially announced on November 11, 2023. The authority is allowing fund managers more flexibility by extending the initial deadline to comply with the new regime until April 2, 2025, which is a 4 month additional period compared to the initial target date of December 2, 2024. The final report, which includes the complete implementation criteria, was finalised and published on May 16, 2024 and you may learn more about it in our blog post. More information can be found on the FCA website.
The updated requirements are applicable for funds whose names include the terms “sustainable”, “sustainability” or “impact” (or a variation of those terms) and which intend to either use a label or to officially modify the name of the fund. As an additional condition, the FCA specifies that the respective firms must submit a completed “application for approval of amended disclosures” no later than October 1, 2024. It is also clearly noted that the new deadline is not applicable for funds who are not using the specified terminology in their names.
The FCA is specifically referring to this extension as a “limited temporary flexibility” and is encouraging all firms to advance in their applications in due time without unnecessarily delaying any required actions on their side. At the same time, the authority is reconfirming that the compliance criteria under SDR remain the same and that all sustainability products, as officially defined by the FCA, which use a sustainability-related term in their names, should make sure that these terms are aligned to the product’s sustainability objectives, policies and strategy. This requires such products to have material sustainability characteristics in a sense that these characteristics are shared by at least 70% of its asset. More details on the definition and use of “sustainability characteristics” can be found in FCA’s Handbook – point ESG 4.3 Naming and marketing.
cleversoft services
cleversoft offers an SDR Service for the UK-based Portfolio Managers and leverages already existing components from SFDR. cleversoft supports all UK clients and will provide this service well ahead of the new timeline in April 2025. If you are interested in finding our more about the UK SDR and what is cleversoft’s offering, feel free to reach out to us via our contact form and our experts will be happy to answer your questions.