Navigating the UK SDR: Kneip’s commitment to excellence

The UK Sustainability Disclosure Requirements (SDR) and investment labels regime represent a significant step towards enhancing transparency and accountability in sustainable finance. Introduced by the Financial Conduct Authority (FCA), the UK SDR aims to provide investors with clear, consistent, and comparable sustainability information from issuers and investment managers.

The FCA  framework is designed to combat greenwashing and ensure that sustainability claims are substantiated by robust data.

At Kneip, we are proud to announce that we have successfully delivered the Consumer Facing Disclosure on behalf of our clients by the 2^nd of December deadline. This achievement underscores our commitment to supporting our clients in meeting regulatory requirements efficiently and effectively.

Understanding UK SDR reporting requirements and timeline

Here are the key UK-SDR regime milestones:

1. Anti-Greenwashing Rule: Effective since  31 May 2024, this rule mandates that all sustainability-related claims must be fair, clear, and not misleading. This ensures that investors receive accurate information and to prevent greenwashing
2. Investment Labels: From 31 July 2024, firms can start using specific sustainability labels for their investment products. These labels help investors identify and choose products based on their sustainability characteristics
3. Naming and Marketing Rules: By 2 December 2024, firms must comply with new naming and marketing rules. This includes the accurate use of sustainability-related terms in fund names, the proper use of investment labels and ensuring that all marketing materials accurately reflect the sustainability characteristics of the products
4. Distributor requirements: also starting from 2 December 2024, distributors must ensure that product-level information (including SDR labels) is readily available to consumers
5. Product Disclosure Requirements: Firms have until 2 December 2025 to comply both with simplified (consumer-facing) and more detailed product disclosure requirements. These disclosures must provide comprehensive information about the sustainability aspects of the investment products, helping investors make informed decisions.
6. Entity-Level Disclosure Requirements: By 2 December 2026, firms must meet entity-level disclosure requirements. This involves providing information about the overall sustainability practices and performance of the firm itself, not just individual products

These phased timelines allow firms to gradually adapt to the new requirements, ensuring a smooth transition and compliance with the UK SDR framework.

The different labels under UK SDR

The UK SDR introduces a set of sustainability-related product labels to help investors identify and choose sustainable investment products. These labels include:

• ‘Sustainability Focus’: For products primarily investing in assets that are environmentally and/or socially sustainable
• ‘Sustainability Improvers’: For products aiming to improve their sustainability performance over time
• ‘Sustainability Impact’: For products targeting a pre-defined positive measurable impact in relation to a specific positive environmental or social outcomes
• ‘Sustainability Mixed Goals’: For products that invest at least 70% combining elements of the other three labels

What is the consumer facing disclosure?

The Consumer Facing Disclosure (CFD) is a critical component of the UK SDR. It provides clear and accessible information to retail investors about the sustainability characteristics and performance of investment products. Firms must produce a clear, concise SDR-CFD for products either with an SDR investment label, or those using sustainability-related terms (without a label).

What is the precontractual document?

the pre-contractual document is a mandatory disclosure that must be included in a fund’s prospectus or prior disclosure document. This document, often referred to as “Part A,” outlines the sustainability-related features of the investment product, including its sustainability objectives, criteria for asset selection, and how these align with positive environmental or social outcomes. It ensures transparency and helps prevent greenwashing by providing clear, specific, and measurable information about the fund’s sustainability commitments.

How Kneip supports asset managers

Kneip offers comprehensive support to asset managers in navigating the complexities of the UK SDR. Our services include:

• Document Production: We assist in the preparation and submission of all required disclosures, ensuring compliance with regulatory standards.
• Ongoing Compliance Support: Our team offers continuous support to ensure that all disclosures remain up-to-date and compliant with evolving regulations.

Visit our UK service offer to get started and contact us for more information. Our dedicated team is ready to assist you in meeting your sustainability disclosure requirements and enhancing your transparency efforts. Visit our website to learn more and get in touch with us today.

By leveraging Kneip’s expertise, asset managers can confidently navigate the UK SDR landscape, ensuring compliance and fostering trust with their investors. Let us help you achieve your sustainability goals and maintain regulatory excellence.