SDR, greenwashing, ISSB… a busy day for sustainability rules & disclosures

Apr 24th '24

Article by Avyse Partners.


I’ve started blogs before saying how easy it is to mention that “sustainability regulation is a highly evolving landscape” as a conversation starter. Days like yesterday justify the use of such phrases, especially when one travels back to London after a long weekend and finds out that three key awaited developments have all been published on the same morning. In any case, here is a quick summary of the FCA’s much awaited Final Guidance on its anti-greenwashing rule, a consultation paper to expand SDR to portfolio management services, and the beginning of the journey towards a IFRS S3 & S4 disclosures by the ISSB.


FG24/3: Final Guidance on the Anti-Greenwashing Rule

With only a month to go until its entry into force, the anti-greenwashing rule now has finalised guidance to help firms navigate its application. Most of the content remains similar to the version published back in November, summarised here. After some speculation in the industry, the guidance will be applicable as soon as the general rule kicks in on May 31, 2024. The FCA has provided a bit of further context through additional examples covering social claims and what good practice looks like.


Finally, there is also additional clarification on the scope of application of the rule: it regulates sustainability claims made in relation to products and services offered by FCA authorised firms to a UK audience – either business to business (B2B) or business to consumer (B2C). However, further emphasis is laid upon claims made by a firm about itself which may be considered part of the “representative picture” of a business. The guidance also reminds firms of CMA (Competition and Markets Authority) and ASA (Advertisement Standards Authority) guidance on this corporate-level claims, which indirectly widens the scope of application of the rule.


CP24/8: Extending SDR to Portfolio Management

Another eagerly anticipated update published is the FCA’s consultation paper on expanding the Sustainability Disclosure Requirements (SDR) regime to portfolio management activities. Under the new proposal, firms providing portfolio management services would be able to use sustainability labels starting 2 December 2024, and Naming and Marketing Rules would also be applicable from the same date. Entity and product-level disclosures would be mandatory from 2 December 2025 for bigger firms, and those with more than £5bn AUM would need to produce them by a year later. (If these are new concepts to you, you can access our SDR deep-dive here). Since the rules are focused on protecting retail consumers, the proposal is aimed at wealth management services for individuals and model portfolios for retail investors. Those offering portfolio management services to institutional investors can opt in to the regime but will not be subject to the naming and marketing requirements and associated disclosures.


If firms who provide these services want to use a label, 70% of the gross assets in the portfolio will need to be invested in accordance with the sustainability objective. If, for example, the portfolio manager invests funds, these will be treated as “assets”, and it is the responsibility of the portfolio manager to ensure they meet the labelling criteria. Portfolio managers also need to meet the other relevant qualifying criteria associated with the use of labels, including all associated disclosures, record keeping or notification to clients and the FCA.


ISSB to Begin Work Towards Launching IFRS S3 & S4 Standards

Finally, the ISSB published a news note today signalling it will start working in the development of two new disclosure frameworks on risks and opportunities associated with:


  • Biodiversity, ecosystems, & ecosystems services; and
  • Human capital


Even if these topics are likely to be considered by firms within IFRS S1 – which covers all sustainability-related risks and opportunities -, the rise of frameworks such as TNFD and a consultation process on what should be the organisation’s next steps have led to this development. At this stage we know very little about the exact nature of the contents of these disclosures, but it’s only reasonable to expect that ISSB will leverage existing frameworks such as SASB or TNFD to come up with its next set of disclosures.


At Avyse, we are working with the fine print of these rules to help clients understand new obligations, whilst looking forward towards what’s coming down the pipeline so that we can future-proof your sustainability approach. If any of these topics are of your interest, feel free to send me a message at


Source: Avyse Partners. Author: Ramon Varela – Associate at Avyse Partners


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