Sustainability Disclosure
The Financial Conduct Authority (FCA)
Sustainability Disclosure Requirements (SDR)
The FCA, by whom SG Kleinwort Hambros (SGKH) is regulated to undertake investment business in the United Kingdom has introduced the SDR regime, the aim of which is to ensure that financial products that are marketed as sustainable should do as they claim and firms have the evidence to support such claims.
FCA’s SDR rules, comprises the following key aspects:
Anti-Greenwashing Rule
All UK FCA authorised firms are required to comply with an anti-greenwashing rule which requires sustainability related claims to be clear, fair and not misleading.
Labelling Regime
Four new voluntary investment labels have been introduced, the aim of which is to help investors to navigate differing Environmental, Social, and Governance (ESG) focused investment strategies and mitigate greenwashing risk. The four labels are:
- Sustainability Focus
Investment in assets that are currently environmentally and/or socially sustainable.
- Sustainability Improvers
Investment in assets that aim to improve their environmental and/or social sustainability over time (i.e. the assets may not currently be sustainable).
- Sustainability Impact
Investment in assets with the aim of achieving a pre-defined positive and measurable environmental and/or social impact.
- Sustainability Mixed Goals
Investment in a combination of the above sustainability objectives
Consumer Facing Disclosure Document
FCA regulated firms such as SGKH, that distribute SDR products on an Advisory or Execution Only basis, are required to provide a Consumer Facing Disclosure Document to UK retail investors. This document will summarise the product’s key sustainability characteristics and will provide information such as the name of the product manager, the name of the product to which the disclosure relates and its sustainability objective.
Non UK Funds
Non UK Funds are not subject to the UK requirements as outlined above. On trading in such products on an Advisory or Execution Only basis, UK retail investors will be provided with the following notification ‘This product is based overseas and is not subject to the Financial Conduct Authority (FCA) Rules, on UK Sustainable Investment Labelling and Consumer Disclosure requirements’.
FCA Website
For more information on the Sustainability disclosure and labelling regime, please see the FCA Website:
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