Commentary: FCA’s Sustainability Disclosure Requirements (SDR)

As the deadline for responses to FCA's Sustainability Disclosure Requirements (SDR) and investment labels proposal arrives, William Marshall, Chief Investment Officer, Hymans Robertson Investment Services (HRIS) comments on the need for clarity and trust when it comes to developing regulations for sustainability:

“We recognise how important it is to develop clear criteria against which sustainable products can be assessed. As ultimately, this will help consumer choice. The additional clarity being proposed will also make it easier for Advisers as they seek to provide effective support in this area.  

“Advisers and consumers alike must be able to trust sustainable investments and key to this moving forward is accessibility which has, for some, been out of reach. Barriers have been the growing use of jargon and a consequent lack of clarity on what can be considered as being ‘sustainable’. The aims of the FCA’s proposal are solid, and we strongly support the intention to protect consumers from greenwashing. However, we believe that language used to explain the labels and category criteria needs to be both simple and clearly understandable by retail investors and we have encouraged the FCA to ensure this is the case. 

“We also support the FCA’s proposal to introduce aspects of the regime over multiple years and would encourage a proportionate approach to enforcement action is taken as the regime ‘beds in’. Consumers, Advisers and Asset Managers all need to build familiarity with a new labelling regime and have confidence that the required standards are being met. Trust in the system will help deliver capital to support the process of long-term change.”