Investment Regime

FCA SDR and anti-greenwashing: the rules for sustainable investments

Q: Can a fund use "sustainable" in its name?

The naming and marketing rule restricts thirteen terms, not three (ESG 4.3.2R(2)), and its final limb is open-ended. Only three are label-gated: sustainable, sustainability and impact. Unlabelled funds may use the other ten subject to ESG 4.3.5R. Impact is restricted even for labelled funds: ESG 4.3.4R(2) bars focus, improvers and mixed goals funds from using it in the product name. 2 December 2024 is a longstop under ESG TP 1.9R, not a start date.

The FCA's Sustainability Disclosure Requirements govern how investment products are labelled and marketed as sustainable.

Often confused with UK SRS, SDR applies to funds and asset managers, while UK SRS covers corporate reporting.

SDR vs UK SRS

Different Rules for Different Purposes

The Sustainability Disclosure Requirements (SDR) are the FCA's rules for how investment products are labelled, named and marketed as sustainable, designed to give investors clear information and curb greenwashing.

SDR is distinct from UK SRS: SDR applies to investment funds and asset managers, while UK SRS is the corporate sustainability reporting standard.

At its core is the anti-greenwashing rule, which has applied to firms since 31 May 2024.

FCA SDR Regime, UK SRS Standards

Investment Labels

The four sustainability labels

From 31 July 2024, qualifying managers may adopt one of four sustainability investment labels — Sustainability Focus, Sustainability Improvers, Sustainability Impact, and Sustainability Mixed Goals — each with its own qualifying criteria and disclosure obligations 393.

Adoption is voluntary but the criteria are strict, and many funds have changed their names as a result 393.

Fund Naming

Naming and marketing rules

From 2 December 2024 at the latest, only funds that have adopted an SDR label may use "sustainable", "sustainability" or "impact" in their name 392.

Related terms such as "responsible" or "green" may still be used by non-labelled funds, but only where accurate and accompanied by consumer-facing disclosure — the rule that has driven widespread fund renaming 392. In all, thirteen sustainability-related terms are restricted under the naming and marketing rule; only three of them — "sustainable", "sustainability" and "impact" — are reserved for labelled funds, and the other ten remain open to unlabelled funds that meet these conditions 392.

Disclosure Structure

The disclosure tiers

SDR layers disclosure by audience and firm size.

Consumer-facing and pre-contractual disclosures apply when a fund uses a label or sustainability terms; product-level reports are due within 16 months of a manager first using a label or a restricted term, with a longstop of 30 June 2026 for managers who started before 28 February 2025 321. Entity-level reports — building on the TCFD/ISSB four-pillar structure — apply first, by 2 December 2025, to enhanced-SMCR asset managers (a threshold set in SYSC 23 Annex 1 and raised from £50bn to £65bn AUM on 10 July 2026), and then, by 2 December 2026, to other in-scope managers with £5bn or more AUM 321.

What is SDR?

The Sustainability Disclosure Requirements (SDR) are the FCA's rules for how investment products are labelled, named and marketed as sustainable.

SDR applies to investment funds and asset managers to give investors clear information and prevent greenwashing.

What is the anti-greenwashing rule and when did it start?

The FCA's general anti-greenwashing rule took effect on 31 May 2024 and applies to all FCA-authorised firms.

It requires that any reference to a product or service's sustainability characteristics be consistent with those characteristics and fair, clear and not misleading.

It does not cover claims a firm makes about itself, which are instead governed by the FCA's Principles, the Consumer Duty and the CMA/ASA green-claims guidance.

What are the four SDR labels?

From 31 July 2024, qualifying managers may adopt one of four sustainability investment labels: Sustainability Focus, Sustainability Improvers, Sustainability Impact, and Sustainability Mixed Goals.

Each has specific qualifying criteria and disclosure obligations.

Can a fund use "sustainable" in its name?

The naming and marketing rule restricts THIRTEEN terms, not three (ESG 4.3.2R(2)), and its final limb is open-ended — any other term implying a product has sustainability characteristics.

Only three of the thirteen are label-gated: "sustainable", "sustainability" and "impact".

Unlabelled funds may use the other ten, subject to ESG 4.3.5R, which requires the product to have sustainability characteristics and a name that accurately reflects them. "Impact" is restricted even for labelled funds — ESG 4.3.4R(2) bars a manager using the focus, improvers or mixed goals labels from using "impact" in the product name.

And 2 December 2024 is a longstop under ESG TP 1.9R, not a start date: the rules bite earlier if a label is used earlier.

How is SDR different from UK SRS?

SDR governs investment products (how funds are labelled and sold) and is overseen by the FCA.

UK SRS governs corporate reporting (how companies disclose their own sustainability) and is the ISSB-aligned standard that the FCA proposes to make mandatory for listed companies.

Does SDR apply to portfolios or offshore funds?

SDR's labelling and disclosure rules currently apply to UK-authorised funds and their managers, and offshore funds are out of scope of those rules.

The anti-greenwashing rule is different: it binds all FCA-authorised firms, so it already applies to portfolio managers too.

In February 2025 the FCA said it was not the right time to finalise rules extending the labelling regime to portfolio management, and no date has been set for that or for bringing offshore funds into scope.