Written by Zhuan Faraj

On 3 November 2021, the FCA published DP21/4: Sustainability Disclosure Requirements and investment labels (the “Discussion Paper”), seeking views on new sustainability disclosure requirements for asset managers and FCA-regulated asset owners, as well as a new classification and labelling system for sustainable investment products.

This forms part of the FCA’s ESG Strategy (announced on the same day), and builds on the Government’s recent announcement of Sustainability Disclosure Requirements (on which see our article here). Responses to this Discussion Paper will inform the FCA’s policy proposals for consultation in Q2 2022.

The FCA states that it welcomes the growing market and innovation in products targeting various sustainability objectives, themes, or characteristics. However it also considers there to be a risk of harm if the market responds to rising demand without adequate regulatory checks and balances. The FCA states that it aims to build trust in the market, improve transparency for consumers and better meet the information needs of institutional investors and other stakeholders.

To help inform the FCA’s work, the Discussion Paper seeks feedback on potential approaches to the design of:

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

The deadline for comments is Friday 7 January 2022, and both the Discussion Paper and online response form can be accessed here. Further details about Burges Salmon’s Sustainable Finance practice can be found here.