On 9 September 2024, the FCA published a new webpage stating that it was offering firms temporary flexibility to comply with the ‘naming and marketing’ rules under the Sustainability Disclosure Requirements (SDR).

The FCA states that:

  • The new anti-greenwashing rule took effect from 31 May 2024.
  • Since 31 July 2024 managers of UK-based investment funds have been able to use investment labels on their products. 
  • Firms should now be taking all reasonable steps to ensure compliance with the ‘naming and marketing’ and disclosure rules, which come into force from 2 December 2024.

The FCA states that the new SDR raises the bar and that it has become clear that it has taken longer than expected for some firms to make the required changes. In particular, some firms wishing to use an investment label, or which need to change the names of their products, require more time to meet the higher standards and prepare the disclosures needed for FCA approval. 

Given the importance of getting the SDR right for investors the FCA is taking a pragmatic approach and is offering limited temporary flexibility until 5pm on 2 April 2025 for firms to comply with the ‘naming and marketing’ rules in relation to a sustainability product which is a UK authorised investment fund in exceptional circumstances where the firm:

  • has submitted a completed application for approval of amended disclosures in line with ESG 5.3.2R for that fund by 5pm on 1 October 2024; and
  • is currently using one or more of the terms ‘sustainable’, ‘sustainability’ or ‘impact’ (or a variation of those terms) in the name of that fund and is intending either to use a label, or to change the name of that fund.

The FCA adds that:

  • where firms can comply with the rules without requiring this flexibility, they should do so. The FCA also expects firms to comply with the rules as soon as they can, without waiting until 2 April 2025;
  • firms must continue to comply with all other relevant rules, including the anti-greenwashing rule; and
  • these temporary measures do not apply to funds using other sustainability-related terms in their names that are not specified above.

The FCA also states that it has received some queries about the authorisation of mergers, wind-ups or terminations before 2 December 2024.  It explains that it will take a supportive, proportionate and outcomes-based approach in these circumstances. Firms with questions can contact their supervisor or usual supervisory contact to discuss on a case-by-case basis.