The UK FCA has said it will offer firms temporary flexibility to comply with naming and marketing rules under their Sustainability Disclosure Requirements.

The new Sustainability Disclosure Requirements and investment labels regime were published on 28 November 2023 and are due to come into force on 2 December 2024.

However, the FCA say that engagement with the investment industry has shown that more time is required for firms to make the required changes. As such, the FCA says it will offer “temporary flexibility” until 2 April 2025 for firms to comply with the ‘naming and marketing’ rules. These relate 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

Bhavik Parekh, Research Associate at MainStreet Partners, has said, “By allowing this ‘temporary flexibility’, the FCA has given a little breathing room for funds to apply a label if they have ‘sustainability’ or ‘impact’ related terms in the name. This will allow further time for asset managers to complete the authorisation process (which is taking some longer than anticipated) and gives more time to prepare all the necessary documentation.

However, it should be noted that for the vast majority of funds that are in scope of the naming and marketing rules, i.e. more general ESG funds, these will still have to comply by the 2nd December.”

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