The Financial Conduct Authority (FCA) announced that it is delaying the implementation of the Sustainability Disclosure Requirements (SDR) fund labeling rules for asset managers until 2 April 2025. The rules were originally set to take effect in December 2024, and the goal of pushing them was to give firms more time to meet the new standards.

The private equity or credit firms, asset managers, and impact investors with companies operating in the UK now have more time to comply with some of the new “naming and marketing” rules for sustainability-related investment products. 

Let’s explore the “naming and marketing” rules and the delay in detail. 

About the ‘naming and marketing’ sustainability rules

The ‘naming and marketing’ rules are a part of FCA’s SDR, which was introduced back in November 2023. These rules are aimed to help investors better assess the attributes of investment products and avoid greenwashing risks. The SDR included labeling rules for investment products so that sustainability-related terms can only be used in the product’s name if the appropriate label is used. If the label is not used, companies must avoid terms such as ‘sustainable,’ ‘sustainability,’ or ‘impact’ on their product. 

These rules were scheduled to come into effect from early December 2024 to 2 April 2025 for more effective implementation. Supporting their decision, the FCA mentioned, “Through engagement with industry and their representative trade bodies, it has become clear it has taken longer than expected for some firms to make the required changes.”

Who’s eligible for a delay in implementation?

The FCA is offering delay in implementation flexibility for all the UK-authorized investment funds with specific circumstances. Those circumstances include : 

• 
  firms that have submitted applications for amended disclosures by 1 October 2024. 
  
  

• 
  firms that are currently using one or more of ESG terms such as ‘sustainable,’ ‘sustainability,’ or ‘impact’ in the name of that fund and are intending to use a label. However, it doesn’t reply to firms that use other sustainability-related terms. 

In addition, the naming rules are consistent with pre-SDR guiding principles, which firms should already be complying with. 

Next steps

The delay allows firms to better align their practices with the new regulatory framework, which includes stricter guidelines on the use of sustainability-related terms in marketing and product naming. Firms that need help in complying with any SDR rules or have any questions can contact their supervisor or usual supervisory contact. 

While you’re here…

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