As the FCA’s Consultation Paper on SDR closed this week, Abi Reilly, Funds Practice Lead at Bovill, has commented.
She said: “Bovill supports the FCA’s drive to create a robust framework for sustainable investing, and there is broad agreement across the industry that SDR will help to combat greenwashing (1). In research carried out by Bovill recently, 76% of those polled said either that the SDR investment labels were or may be relevant to their product ranges (2), and over half those polled have already factored ESG considerations into their products or services (3).
“However, there remains a great deal of uncertainty around the adoption of SDR. In recent research, Bovill found that more than two-thirds of firms are unsure how challenging they will find the proposed requirements to implement (4). In addition, they believe that analysing the impact on each of their products and services will be the most challenging aspect of implementing the proposals (5). We have seen in the past how firms can easily be caught flat-footed if they don’t take every opportunity to get ahead of events and prepare for major new regulations.
“Moreover, many firms will need to think about how SDR aligns with the EU’s SFDR. The read across is far from straightforward and there is a risk that products will be labelled as sustainable in one jurisdiction but not in another.
“While we expect there to be significant changes between the proposals and the final policy, firms cannot afford to wait around. They should start thinking about the impact of SDR on their products, and those that don’t will find that they are playing catch up by the time the final policy paper is out.”