The Financial Conduct Authority has published examples of good and poor practice in pre-contractual disclosures for funds using Sustainability Disclosure Requirements (SDR) sustainability labels. The note is aimed at firms in scope of SDR that want to adopt labels for authorised and unauthorised funds, and it does not cover pre-contractual disclosures for unlabelled funds under the FCA’s naming and marketing rules. The examples draw on what the FCA has seen through the fund authorisations process and industry engagement. While applications to update pre-contractual disclosures have improved as firms have become more familiar with SDR and labels have expanded across asset classes and strategies, the FCA still sees cases where it is unclear how a fund meets the labelling requirements or whether disclosures accurately reflect what the fund invests in. It sets out characteristics of good disclosures, including being clear and concise, explaining interpretive terms, avoiding duplication, using a consistent narrative, remaining specific to the fund, applying the correct label and accurately reflecting holdings, with model portfolios used as part of the FCA’s checks. The label-specific sections cover Sustainability Focus, Sustainability Improvers, Sustainability Impact and Sustainability Mixed Goals, with recurring themes including clear, specific and measurable objectives, robust and evidence-based standards, the 70% gross asset threshold for Focus and Improvers funds, disclosure of material negative outcomes and conflicts with objectives, KPIs that evidence progress, escalation planning for Improvers funds that are not progressing, and Impact funds’ theory of change and measurable investment activities. The FCA notes the examples are illustrative, not comprehensive, and should not be used as templates or as a substitute for the relevant SDR rules and guidance, including the anti-greenwashing rule and related guidance.
Financial Conduct Authority 2026-02-27
Financial Conduct Authority publishes good and poor practice examples for Sustainability Disclosure Requirements fund labels
The Financial Conduct Authority (FCA) released examples of good and poor practices in pre-contractual disclosures for funds using Sustainability Disclosure Requirements (SDR) labels. The guidance highlights the importance of clear, concise, and accurate disclosures that reflect fund investments and meet labelling requirements. It emphasizes the need for specific objectives, robust standards, and measurable outcomes, noting that the examples are illustrative and not a substitute for SDR rules and guidance.