2024 SDR sustainability regulations: Key dates and requirements

Significant updates to the Sustainability Disclosure Requirements (SDR) and new investment labels will reshape how investment firms operate and communicate sustainability in Q2-4 2024.

Here’s what you need to know about the upcoming regulatory milestones that will help enhance transparency and combat greenwashing across your portfolio.

Anti-greenwashing rules kick in on 31 May

Firstly, on 31 May, the fight against greenwashing takes a substantial leap forward. The Financial Conduct Authority (FCA) has set rules requiring all financial entities, including large fund managers and small financial advisers, to conduct rigorous checks on their promotional materials. This ensures all claims related to sustainability are fair, clear, and non-misleading. Whether you’re drafting a suitability letter or updating your website, each piece of content must undergo a thorough anti-greenwashing review by a competent and ideally independent individual. This broad application underscores the FCA’s commitment to genuinely sustainable practices across all financial activities.

Introduction of sustainability labels on 31 July

Additionally, a significant milestone occurs with the roll-out of the FCA’s sustainability labels in July: Improvers, Focus, Impact, and Mixed Goals. This initiative mandates advisers to discuss these labels with clients, ensuring informed investor choices. Regardless of a client’s preference towards sustainability, advisers should explain these new labels and document the client’s stance on sustainable investing. This not only aids in making informed choices but also promotes transparency in the advisory process.

Recognising sustainable characteristics on 2 December

Finally, not every sustainable fund will align with the new labels, and some may opt for a more flexible investment approach. Funds that use sustainability-focused terms in their branding or marketing will need to provide disclosures akin to those required for labelled funds. Advisers must include these funds in their due diligence, ensuring they can match these options with client preferences effectively.

Supporting sustainable investment: The role of SI Engage

At SI Engage, we understand the challenges and opportunities presented by these regulatory changes. Our platform enhances the integration of stewardship within investment teams, aligning with the FCA’s expectations and supporting the sustainable investment mandates of our clients. By facilitating comprehensive tracking and reporting, SI Engage helps ensure that your stewardship activities are as effective as they are strategic.

Book a free demo today to discover how SI Engage can help you navigate these new requirements, restore trust in sustainable investment practices, and contribute to a more transparent and responsible financial environment.

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