Sustainable ETFs subject to SDR but unable to benefit from labelling regime

Distributors subject to disclosure

While the Sustainability Disclosure Requirements have blocked ETFs from using the new labels, any ESG-focused ETFs distributed in the UK will still be subject to disclosure requirements.

In November 2023, the FCA published its final policy statement with the rules and guidance for its SDR, including four product labels based on sustainability goals and criteria. Galina Dimitrova, director of investment and capital markets at the Investment Association, said: "The investment labels regime brings welcome clarity to investment managers on the regulator's expectations for this important area of the fund market." However, these labels only apply to UK-domiciled funds, meaning ETFs, which are typically domiciled overseas and passported into the country, will be prevented fr...