In brief: UK calls for comment on labelling system

FCA proposes multi-tier classification criteria for planned sustainability labelling system.

The Financial Conduct Authority (FCA) has proposed a series of minimum standards for sustainable and responsible investment products in a discussion paper published today.

The regulator published its “refreshed” ESG strategy and launched a discussion paper seeking initial views on disclosure requirements for asset managers and FCA-regulated asset owners under the planned Sustainable Disclosure Requirement (SDR) regime, as well as the UK’s planned sustainable investment labelling system. The input will inform policy proposals to be issued for consultation in the second quarter of 2022.

This summer it was announced that the FCA and UK Treasury were collaborating on a labelling regime for sustainable investment products, which would allow consumers to “clearly compare the impacts and sustainability of their investments for the first time”.

And the recently published UK Greening Finance roadmap also outlined plans by the UK Government to consult on the potential introduction of mandatory labels for sustainability related investment products in the next couple of years.

In today’s discussion paper, the FCA sets out its thinking on criteria that could underpin a UK labelling system as well as minimum criteria for funds saying they are responsible or sustainable.

Funds classifying themselves as sustainable would pursue specific sustainability characteristics, themes or objectives, and would be divided into three groups: impact, aligned and transitioning, it says.