Breaking Down the Latest UK Regulations: Unveiling the Sustainability Rules for Financial Products

30th November 2023


FCA’s Recent Disclosure and Investment Labeling Rules

On 28th November the UK Financial Conduct Authority (“FCA”) finally published the Sustainability disclosure rules (“SDR”) and labelling regimes (“Investment Labels”). These measures, highly awaited by the industry, introduce new sustainability disclosure requirements and an investment labelling regime.

Here is our high-level overview:

Disclosure obligations:

The SDRs require certain firms to produce and publish consumer-facing, precontractual and ongoing product-level disclosures.
Specifically, firms must produce:

  • consumer-facing disclosures summarising the product’s key sustainability characteristics in a stand-alone (for now not templated) document. These rules are applicable to labelled products and products using sustainability-related terms in their naming and marketing;
  • Detailed product-level disclosures in the pre-contractual documents, on an ongoing basis and on demand. These rules are applicable to labelled products and products using sustainability-related terms in their naming and marketing;
  • Entity level disclosures for asset managers with AUM above GBP 5bn.

Investment Labels:

The Investment Labels introduced by the FCA are four and reflect the sustainability ambitions of the products eligible for the labels. The FCA has established the requirements for the use of such a label and the criteria for eligibility.
These are:


In order to allow retail clients easy navigation of the complex sustainable products landscape, the rules published by the FCA also include specific “naming and marketing” rules, which establish requirements for when sustainability-related terms can be used in the name and marketing of a financial product as well the associated disclosures and statements, when these products are making use of a label.

Management of Sustainability Risks and Opportunities:

The rules published by the FCA also require firms to publish a “Sustainability Entity Report” disclosing how firms are managing sustainability-related risks and opportunities in relation to the products they manage. Additional requirements here to firms that use Investment Labels and sustainability-related terms in the name and marketing of a financial product.


Recognising the role of distributors in marketing financial products, the FCA has also introduced some obligations to these firms.

Scope of application:

Financial Products:

  • SDR applies to authorised UK funds and unauthorised UK funds. It does not apply to non-UK AIFs managed by a UK AIFM.
  • Non-UK AIFs marketed under NPPR or EU funds under the temporary marketing permission are not caught but UK Firms distributing these overseas recognised funds can be caught (if the recognised fund uses ESG terms in its name or marketing materials) and are required to include a specific notice to clarify that the FCA SDR and investment labels do not apply.

Firms impacted:

• SDR applies to UK Fund managers (not UK portfolio managers for now), i.e.:

  • a firm managing a UK UCITS or an AIF, excluding:
  • a firm managing a feeder fund; or
  • a full-scope UK AIFM or a small authorised UK AIFM managing an unauthorised AIF not listed on a recognised investment exchange;

• The Anti-Greenwashing rule applies to all UK FCA Authorised firms, including portfolio managers.

• Non-UK Firms are not caught by SDR even when marketing funds in the UK.

There is also an exemption for firms from specific disclosure obligations if the AUM is less than GBP5bn.

How Zeidler Group can assist:

Our Zeidler ESG Legal Team would be delighted to assist you with any questions you may have in this regard.


Elisa Forletta-Fehrenberg