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United Kingdom: FCA Sustainability Disclosure Requirements Regime

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The FCA’s Sustainability Disclosure Requirements (SDR) regime is the UK’s flagship ESG regime, set to apply from May 2024 onwards. The SDR is primarily a product labelling regime which is accompanied by entity-level disclosure requirements, new anti-greenwashing guidance and ESG marketing requirements.

This implementation guide provides a practical overview of the regime and key points for firms to consider when launching an SDR labelled fund and completing entity-level disclosures. Split into six briefing papers, our implementation guide covers:

Guide A

Introduction, Scope and Application

An introduction to the SDR, including the scope of the regime and its application to specific products.

Guide B

The FCA’s Anti-Greenwashing Rule

A detailed review of the new anti-greenwashing rule, including practical issues that firms should bear in mind.

Guide C

SDR Labelling Regime

An overview of the SDR’s new labels: guidance on determining which label is the right fit and setting SDR-compliant investment objectives.

Guide D

Complying with the Operational Aspects of the SDR

A guide to complying with the operational aspects of the SDR, covering key performance indicators, verification, stewardship and escalation planning.

Guide E

Fund Launch and Distribution Under the SDR

Details on the SDR’s requirements relating to launching and distributing funds.

Guide F

Disclosure and Fund Naming Rules

An overview of the new disclosure requirements and fund naming rules under the SDR.

This guide also considers the interaction between the SDR and the EU’s Sustainable Finance Disclosure Regulation (SFDR) regime. The FCA received substantive feedback to its consultation on the SDR on the importance of interoperability between the SDR and SFDR regimes, and we explore whether this has been a success.

Other Resources

In case you missed the webinar related to this topic, you can access our ESG Regulatory Evolution in 2024: SDR, SFDR and Beyond Webinar which we hosted in January. Speakers included Caitlin McErlane (Chair), Shaneil Shah, Adam Jacobs-Dean (Managing Director, AIMA) and Tonia Plakhotniuk (Vice President, Climate & ESG Capital Markets of NatWest). 

You can also visit our dedicated resource page to access all recordings in our Demystifying ESG Webinar Series.

We hope these briefings will provide useful insight for you. If you have any queries or would like to discuss the contents of the briefings further, please do get in touch with a member of the team.

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Author

Caitlin is a partner in Baker McKenzie’s Financial Services Regulatory practice group, based in the London office.
Caitlin's practice focuses on advising a range of global financial institutions on complex and high value regulatory matters. She advises banks, asset managers, major corporates and payment institutions on navigating UK and EU financial services regulation. She has particular experience in advising clients on regulatory implementation projects, day-to-day compliance issues, and regulatory issues arising in the context of acquisitions, restructurings, and divestments within the financial services sector. Caitlin also advises market infrastructure providers on markets regulation and the provision of cross-border trading solutions.
Caitlin leads our London office’s ESG regulatory work for financial institutions, and advises a range of clients on the drafting and implementation of ESG policies and structuring ESG-focused investment products. Caitlin is an authority on regulatory reforms in the sustainability space and sits on a number of trade association working groups.
Caitlin has been recognised as a "Leading Partner" by The Legal 500 UK, where she is cited by clients as "a great lawyer [who] has a photographic recollection of regulations which makes her an amazing resource for any tricky topic." She is ranked by Chambers for financial services regulation, where clients describe her as "an expert in her field", a "phenomenal regulatory lawyer" and "a highly responsive and excellent communicator" who "consistently provides pragmatic solutions that are within the regulatory framework". Caitlin is also acknowledged by Legal 500 as a Next Generation Partner in Real Estate Funds.

Author

Shaneil Shah is a senior associate in the Financial Services Regulatory Group in the London office.
Shaneil provides strategic regulatory advice to clients across the regulated sector, with a particular focus on the regulations applicable to fund managers, investment firms, market infrastructure, banks and insurers. He advises clients throughout their regulatory lifecycle, from pre-authorisation, through to business expansion and on responding to new regulatory developments. Shaneil also advises on contentious matters, including investigations and enforcement proceedings brought by financial regulators, internal regulatory investigations and financial services disputes.
Shaneil has particular experience advising clients on complex regulatory implementation projects, and has worked closely with a number of asset managers to launch novel products for both retail and wholesale investors. He also advises a wide range of clients on developments in ESG regulations, including the EU’s SFDR and Taxonomy Regulations and the UK’s ESG regime.
Shaneil has undertaken secondments to the London branch of a global investment bank (focusing on contentious matters) and to Baker McKenzie in Hong Kong.

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