FCA Delays Key Sustainability Rules for Asset Managers to April 2025
The UK’s Financial Conduct Authority (FCA) announced today that it will extend the deadline for asset managers to comply with new sustainability-related “naming and marketing rules” to April 2025. The extension aims to give firms more time to adapt to the standards introduced as part of the FCA’s Sustainability Disclosure Requirements (SDR), which were first launched in November 2023 to help investors better assess the sustainability attributes of investment products and combat greenwashing.
Originally set to take effect in December 2024, the naming and marketing rules restrict the use of terms like “sustainable” or “impact” in product names and marketing unless specific sustainability labels are applied. The FCA’s rules create four distinct sustainability labels to help investors differentiate between various environmental and social objectives. These include “Sustainability Focus,” “Sustainability Improvers,” “Sustainability Impact,” and the newly added “Sustainability Mixed Goals.” Funds using these labels must invest at least 70% of their assets in line with the label’s objective and meet detailed disclosure requirements.
The regulator acknowledged that firms have faced challenges in implementing the new standards, stating that “it has taken longer than expected for some firms to make the required changes.” The delay applies specifically to firms using terms like “sustainable” or “impact” in their product names, but does not affect funds using other sustainability-related language.
While the deadline for the naming and marketing rules has been pushed to April 2025, the FCA’s anti-greenwashing rule remains in effect, having been introduced in May 2024. The rule requires all FCA-authorized firms to ensure that their sustainability claims are “fair, clear, and not misleading.”
The FCA emphasized that firms should aim to comply with the naming and marketing rules as soon as possible, rather than waiting for the new deadline.
The FCA added:
“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 our approval.
“Given the importance of getting SDR right for investors, we are seeking to take a pragmatic and outcomes-based approach to provide further support to those firms which may need additional time to operationalise any changes required.”
