The aggregated evidence of corporate and industry association lobbying on the FCA’s proposals for a labeling regime and disclosure requirements shows mixed engagement from the financial sector. A number of comments suggested limiting labeling requirements to sustainable products, as well as less stringent disclosure requirements.
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In response to the FCA's consultation in January 2022, the Investment Association broadly supported the FCA’s approach to the SDR, but argued that the proposed labeling regime should be more flexible and with fewer and less rigid categories. State Street Global Advisors (SSGA) also supported the approach to the SDR, however, it argued against imposing thresholds for the classification of transitioning products and against the “responsible” label definition. Invesco suggested an increase in scope of application of the SDR to all investment products marketed in the UK (i.e. including unit-linked funds), however, it suggested that labels should only apply to products with either sustainability objectives or characteristics, and that there should be voluntary disclosure of transitioning products. Schroders also opposed the inclusion of the “responsible” label, suggesting focusing on sustainable products only as well as a delay to the implementation of the SDR as to allow other policies to progress. Vanguard also encouraged flexibility and requested the “not promoted as sustainable” label be reconsidered due to its potentially negative connotation, also cautioning against an overly prescriptive disclosure framework.
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The Alternative Investment Management Association (AIMA) suggested that labels and disclosures beyond climate risks should not be brought in force until all linked standards are finalized, and supported a reduction in scope and more flexibility. Similarly, abrdn suggested a more flexible approach for transition activities and weaker levels of alignment with the UK Taxonomy, which risks prioritizing data and methodology challenges over urgent action. abrdn also highlighted concerns about the availability of data for Principal Adverse Impact (PAI) disclosures. Allianz suggested that the level of ambition for product labels should be determined by the client and not with regulatory minimum requirements, but supported the disclosure framework.
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On a more mixed position, Securities Industry and Financial Markets Association (SIFMA) advocated for increased ambition in some areas while not supporting others, for instance suggesting the removal of certain criteria and minimum thresholds. Other financial institutions offered overall support of most aspects of the labeling regime, including J.P. Morgan, Insight Investments (BNY Mellon) and the Association of British Insurers (ABI). In terms of disclosure, ABI did highlight data availability issues and suggested disclosure sequencing and Insight Investments argued for a reduction in scope and the exclusion of scenario analysis for certain asset classes.
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Finally, the IIGCC suggested that the scope should be expanded beyond the proposed threshold and highlighted that the labeling approach for transitioning assets would need to be aligned with net-zero by 2050. It did suggest a more flexible approach to disclosures than the EU SFDR, only accounting for disclosures material to the fund.
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During 2021-2022, other financial actors such as NatWest and Association for Financial Market in Europe (AFME) offered high-level support in website articles, while Aviva supported increased ambition by advocating for the inclusion of nature-related considerations in a joint statement in May 2022.
