The FCA says it will take more time to consider its plans to extend the Sustainability Disclosure Requirements (SDR) regime to portfolio management.

It was due to publish a policy statement on the extension in the second quarter of 2025, but has now scrapped those plans.

In an update the regulator said: “We want to ensure an extension of SDR to portfolio management delivers good outcomes for consumers, is practical for firms and supports growth of the sector.

“We will take the necessary time to deliver these outcomes, therefore we no longer intend to publish a Policy Statement in Q2 2025.”

SDR is part of the regulator’s new anti-greenwashing rule to reduce misleading claims. The anti-greenwashing rule for asset managers came into effect at the end of May 2024.

The introduction of the rules has been noted by delays as the regulator stressed it was essential to “get SDR right for investors.”

All through the process it said it has taken “a pragmatic and outcomes-based approach to provide further support to those firms which may need additional time to operationalise any changes required.”

In September the FCA gave firms four more months to comply with the rules. Firms were due to have met the requirements by December 2024 but were given until 2 April to comply.

The FCA said about its plans to extend the rules to portfolio managers: “We are aware that it is taking longer than expected for some asset managers to comply with the SDR and labelling regime and of the potential impact this might have on portfolio managers. This has been highlighted to us in the consultation feedback and industry engagement.”

It was in last April that the FCA proposed extending its anti-greenwashing labelling rule to portfolio managers.

The proposed labelling and Sustainability Disclosure Requirements (SDR) for portfolio managers largely mirrored those introduced for asset managers in November 2023.

It consulted on extending the SDR and investment labels regime to portfolio management with the consultation closing on 14 June.

The Sustainability Disclosure Requirements (SDR) and investment labels regime (PS23/16) were published on 28 November 2023. 

They introduced rules designed to make marketing of SDR investments clearer and also add new investment ‘labels’ to help consumers assess which SDR investments are right for them.

The four ESG labels (pictured above) are:

• Sustainability Improvers, which should aim to invest in assets that have the potential to improve environmental and/or social sustainability over time
• Sustainability Focus, which should aim to invest in assets that are environmentally and/or socially sustainable
• Sustainability Impact, which should aim to achieve a pre-defined, positive, measurable impact in relation to an environmental and/or social outcome
• Sustainability Mixed Goals, which should invest at least 70 per cent in line with a combination of the sustainability objectives for the other label