The FCA has made it a requirement for firms to report the investment labels they are using on funds which fall under Sustainability Disclosure Requirements (SDR) rules.

The regulator said it has made the move as part of its new anti-greenwashing rule to reduce misleading claims.

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

The FCA said authorised firms “should prepare for the new anti-greenwashing rule if they make claims about the sustainability of their products or services, to ensure claims are fair, clear and not misleading”.

It said asset managers must consider if they wish to label products that aim to achieve positive sustainability outcomes. If so, they must assess whether the relevant products meet the qualifying criteria.

It said distributors must prepare to make the labels and consumer-facing disclosures available as soon as reasonably practicable to retail investors, and to keep them up to date following changes made by the firm.

The FCA said: “We have introduced a package of measures to improve the trust and transparency of sustainable investment products and reduce greenwashing.”

The regulator said it had introduced rules and guidance to help consumers navigate the market for sustainable investment products.

The rules are:

• An anti-greenwashing rule that applies to all FCA-authorised firms who make sustainability-related claims about financial products and services.
• Investment labels, disclosure and naming and marketing rules that apply to UK asset managers.
• Targeted rules that apply to distributors of investment products to retail investors in the UK.

The anti-greenwashing rules came into force on 31 May. Firm can begin to use labels with accompanying disclosures from the end of this month.

The naming and marketing rules come into force on 2 December while there are further disclosure rules coming into effect from 2 December 2025 and 2 December 2026.

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

In April the Personal Finance Society launched a new course designed to help Financial Planners and advisers adapt to social and regulatory expectations on sustainable investment.