Laura WilesThe FCA has published examples across a section of investment labels to demonstrate how firms might meet disclosure requirements under the Sustainability Disclosure Requirements (SDR) and investment labels regime, which enters into force on 2 December 2024. Firms have been able to use investment labels since 31 July 2024.
The examples include good practice approaches to each of the SDR disclosure requirements. The FCA also sets out some brief examples of poor practice, including:
- Disclosure of an asset selection process that does not link to the specified sustainability objective and aim of a product.
- The disclosed approach to asset selection not including an explanation and evidence as to why the scoring or threshold is appropriate for defining sustainability.
- Failure to disclose a manager override for asset selection where it exists.
- For a Sustainability Improvers label:
- Failure to disclose the types of evidence the manager relies upon to satisfy itself that assets have the potential to meet the robust, evidence-based standard.
- Short-term and medium-term targets missing or inconsistent with the long-term horizon over which the assets are expected to meet the standard of sustainability.