The FCA's Sustainability Disclosure Requirements (SDR) and investment labels regime (which you can read more about in our previous detailed briefing here) will enter into force on 2 December 2024.
In preparation for this, the FCA has published a list of examples of good practice in pre-contractual disclosures. While the examples are not exhaustive, they provide appreciated guidance on length, level of detail and vocabulary which firms may use to comply with the expectations of each label category.
Among other things, the examples of good practice highlight:
- the use of clear, directive language in explaining the mission statement of an investment, and how a selection process links to the specified sustainability objective and aim of a product;
- where scoring and thresholds are used, the need to include an explanation, and details of methodology and evidence as to why the scoring or threshold is appropriate for defining sustainability;
- a clear consistency and progression between short-, medium- and long-term targets.
While firms have been able to use investment labels since 31 July 2024, the deadline to reach compliance is 2 December 2024.
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