Firms must identify (and disclose) assets that the product invests in for reasons other than to pursue the sustainability objective , such as cash and derivatives used for liquidity and risk management purposes. The product must not invest in any assets that conflict with its 30. Robust and evidence-based KPIs. Firms must also identify (and disclose) the KPIs that they will use to measure the product’s progress towards meeting its sustainability 31. Escalation plan. Firms must have an escalation plan setting out the actions they will take if the assets do not demonstrate sufficient performance against the sustainability 32. The plan should set out the anticipated timescales for addressing any matters that may result in insufficient performance against the sustainability objective. 33. Firms must have in place appropriate resources, governance, and organisational arrangements, commensurate with the delivery of the sustainability objective. This includes ensuring there is adequate knowledge and understanding of the product’s assets and that there is a high standard of diligence in the selection of any data or other information used (including when third-party ESG data or ratings providers are used) to inform investment decisions for the product. 34. Other In meeting the requirements, firms may also consider interactions between organisational arrangements and the delivery of the product to avoid any potential conflicts, as well as oversight by a product governing body, where appropriate. We remind firms of existing obligations such as for governing bodies to have sufficient knowledge, skills and experience, commit sufficient time and act with honesty, integrity and independence. 35. Firms must identify the investor stewardship strategy needed to deliver the sustainability objective, including the expected activities and outcomes, and ensure the strategy and appropriate resources are applied. 36. Other We acknowledge that stewardship may take place in different forms for different asset classes and strategies, may include collaborative engagement, and are likely to be executed at firm level. While firms should outline the outcomes they expect to achieve as a result of their stewardship activities, and therefore demonstrate some correlation between the two, we do not expect firms to demonstrate a causal link between those activities and outcomes. We note that outcomes may not be achieved on an annual basis so disclosures should provide sufficient contextual information to help consumers understand that outcomes may not be achieved in the short term. 37. Where stewardship plays a significant role in the sustainability product’s investment policy and strategy, firms may consider disclosing KPIs related to the outcomes achieved or that measure progress towards the product’s sustainability objective. 38. Where a product tracks an index, firms must only use an index that has a methodology aligned with the product’s sustainability objective and the general and specific criteria. 39. We have outlined our expectations for passive products in Box 3 below. Meeting requirements on an ongoing basis 40. Firms will need to ensure the criteria are met on an ongoing basis. This • ensuring the matters outlined above (eg investment policy and strategy, escalation plan) remain fit for purpose or are updated as necessary, that the independent assessment remains valid and, where relevant, that the index continues to meet the requirements when rebalanced • continuing to maintain appropriate governance and resources, and an appropriate investor stewardship strategy for the product • monitoring whether pursuing the sustainability objective may result in negative outcomes that have not already been identified, identifying any new assets that do not pursue the objective, and monitoring progress towards the objective • carrying out the escalation plan if assets do not demonstrate sufficient performance towards the sustainability objective 41. Firms must take actions as needed to ensure the criteria are met on an ongoing basis. Firms will need to consider whether the use of a label remains appropriate while those actions are being taken, and we would ordinarily only expect minimal deviations from the 42. Firms will also need to carry out a review of their use of a label at least every 12 months. If compliance can’t be restored in a reasonable period of time and the label is no longer

appropriate, firms will need to revise or cease to use the label and comply with the relevant notification requirements to clients and to the FCA. 43. Other In ensuring the criteria are met on an ongoing basis, firms may make updates eg, to their investment policy and strategy, independent assessment, and escalation plan. Firms should consider if making updates in one area may impact 44. The key features of each label that make up the specific criteria are set out below. The examples provided in this section are for illustrative purposes to outline some of the types of approaches and features of products that could potentially qualify for a label. They do not reflect the level of detail or full criteria that will need to be met. 45. This is for products with a sustainability objective consistent with an aim to invest at least 70% in assets that are environmentally and/or socially sustainable, determined using the robust, evidence-based standard that is an absolute measure of environmental and/or social sustainability. ABC Global Renewables Index Fund The objective of the fund is to track an index that is designed to reflect the performance of a global range of companies that produce or provide activities or services to support the production of energy from solar, wind, hydrogen and other renewable sources. The index is designed to reflect the performance of a global range of those companies, and comprises equity securities of companies that are positioned to benefit from the increased demand for clean energy. Those companies must derive a minimum percentage of revenues from the types of activities or services listed above. ABC Green Future Emerging and Frontier Market L T AF The fund aims to achieve capital growth over the long term and a positive environmental impact by investing in climate themes that contribute towards the mitigation of climate change and adaptation of society to negative impacts of climate change.
This may include renewable energy infrastructure, forestry assets, climate insurance provision and resilient real estate. Investments will be selected according to the percentage of expenditure on operations, capital or research and development associated with those climate themes. 46. This is for products with a sustainability objective consistent with an aim to invest at least 70% in assets that have the potential to improve environmental and/or social sustainability over time, and that are determined by their potential to meet the robust, evidence-based standard of sustainability. Firms must obtain robust evidence for selecting those assets. 47. Firms must also identify the period of time in which the product and/or its assets are expected to the meet the standard, including short and medium-term targets for improvements (commensurate with the investment horizon of the product). 48. Other Stewardship plays a key role in this category. Firms’ investor stewardship strategy should support delivery of the objective and therefore help to accelerate improvements in environmental and/or sustainability. 49. The methodology or approach to select assets may be a relative measure or approach eg, selecting the ‘best -in-class’ for a particular sector. The evidence firms may use as the basis for selecting assets may, for example, include forward-looking metrics, transition plans, strategies or other credible information that demonstrates those assets are on a pathway to becoming more sustainable. 50. We have not specified how firms should treat assets that have met their targets for improvements. This will be for the firm to decide. ABC Emerging Markets Social Advancement Fixed Income Fund The fund aims to provide capital growth over the long term by investing in the bonds of companies in emerging markets that have committed to improving their business practices in line with key global social standards, in relation to human rights, working conditions and local community impact. These companies • published their strategies to improve business practices in line with global social • specified timelines for meeting their targets and • met the firms range exclusions criteria. In line with ABC’s stewardship strategy, ABC will support these companies in meeting global social standards. ABC XYZ Global Net Zero Improvers Index Fund The investment objective of the fund is to track the index. The sustainability objective is to invest in companies that are on a credible path to net zero by 2050. The index is constructed by selecting assets according to a net zero alignment framework, demonstrating their potential to decarbonise over time, and that meet XYZ’s sustainability exclusions criteria . Assets in the fund will be subject to ABC's

51. This is for products with a sustainability objective consistent with an aim to achieve a pre-defined positive, measurable, impact in relation to an environmental and/or social outcome (and invest at least 70% of their assets in accordance with that aim). • specify a theory of change setting out how they expect their investment activities and the product ’s assets to contribute to positive impact • specify a robust method for measuring and demonstrating the positive impact of both their investment activities and the product’s assets. 53. Other We recognise that all labels have some of the common features associated with impact investing, such as intentionality, measurability and reporting on progress. While the Sustainability Focus and Improvers labels have an aim consistent with investing in assets that can indirectly improve or pursue positive outcomes, the Impact category aims to directly achieve a positive impact. A key feature of this category is that firms will need to measure and report on how their investment activities contribute to achieving the impact (ie their investor contribution) as well as how the assets are achieving the impact. 54. Firms may contribute to positive impact through investment activities such as engagement with the product’s assets, investing in initial public offerings, participating in new rounds of capital raising, or directing new capital to projects and activities that offer solutions to environmental and/or social problems. 55. We encourage firms to refer to existing frameworks and guidance for impact investing. 56. We also note that impact measurement reporting could include the • an articulation of the ambition and assessment of expected results • an explanation of the investor contribution • monitoring of progress throughout the lifecycle of the investment • where investment is realised or at pre-defined point in time, ex-post evaluation • independent verification of results ABC Global Climate Impact Investment Trust The fund aims to provide capital growth over a longer time horizon by investing in companies and projects that focus on the increased provision of climate change solutions – such as renewable energy generation and infrastructure. Investments will include both listed assets , and unlisted assets and projects that aim to increase access to renewable energy in specified areas . The impact of investments and the firm’s contribution will be measured and reported at least annually. ABC Social Impact Real Estate Fund The fund aims to provide capital and income growth through investing in and owning socially positive real estate assets. The fund will own residential units and let them to organisations that support occupants classified as homeless to progress into self-sufficient living, with the rent financed by local housing authorities. ABC will review and report on its contribution and the contribution of investments in achieving positive social impact relating to the fight against 57. This is for products with a sustainability objective to invest at least 70% in accordance with a combination of the sustainability objectives for the other labels. Firms must identify (and disclose) the proportion of assets invested in accordance with any combination of the other labels. However, requirements for each of the other labels 58. Other For example, for a product invested in assets that are already sustainable and assets that have the potential to improve over time, a firm may use the Sustainability Mixed Goals label but will need to meet the specific criteria (and associated disclosures) for the Sustainability Focus and Sustainability Improvers labels, respectively, for the proportion of assets that are sustainable or improving.
ABC Sustainable Multi ‑asset Allocation The fund aims to provide capital growth through investment in funds that purposefully set out to invest in companies that provide solutions to challenges posed by the transition to a more sustainable future, on both people and planet. These funds may include both labelled and unlabelled funds that the investment manager considers to meet, or demonstrate the potential to meet , sustainability ABC Multi ‑asset Green Energy Fund This fund intends to provide capital growth by investing in a range of equities and bonds that support and catalyse the transition to renewable energy in the wider economy. This product intends to invest around 30%-40% of assets in equities and bonds focused on companies already predominantly producing renewable energy and around 40%-50% of assets in equities and bonds supporting activities to increase renewable energy production. The qualifying criteria for labels were designed to accommodate both active and passive strategies, where for passive strategies the product tracks an index that meets the criteria for a label. When constructing a passive product with the intention of using a sustainability label, managers should ensure that the chosen index aligns with the sustainability objective for their product (to improve or pursue positive sustainability outcomes) and meets the qualifying criteria. Managers of passive products should also consider the most appropriate KPIs to track the performance of the product towards the sustainability objective. This may require a deeper assessment and understanding of the index methodology to identify KPIs that can be repeatably produced and fairly reflect the performance of the product against its sustainability objective. Managers may consider either product -wide or asset -specific KPIs to be most appropriate to demonstrate the performance of index-tracking products. We understand that managers do not have direct input to or control of the assets that are selected to be tracked within the index. For example, index providers may rebalance their indexes and this may lead to the removal or introduction of assets. However, as the manager remains responsible for ensuring the product meets the criteria on an ongoing basis, we would expect them to take reasonable steps to do so. This may, for example, include regular engagement with the index provider. We would also expect the manager’s stewardship strategy to include its approach for stewardship in respect to passive products. Firms will also need to disclose how the index providers’ methodology aligns with the product’s sustainability objective in their pre-contractual disclosures. We have not prescribed how managers should do so. However, we expect managers to consider what would be decision-useful for their clients and consumer s.

Box 4. Alternative tools and strategies Alternative tools and derivatives, short selling, securities lending In our consultation, we acknowledged the important role that wider investment tools such as derivatives, short selling and securities lending can play – whether generating additional income or supporting an overall investment strategy – and our overarching position remains unchanged. Our rules provide flexibility for firms to determine the most suitable approach to these alternative investment tools and approaches based on their product’s sustainability objectives and investment policy and strategy. Firms should be transparent as to how these tools and strategies are used, explaining how they support the attainment of the product ’s sustainability objectives. As noted above, where relevant to its investment policy and strategy, firms should explain how use of derivatives and how short selling aligns with or contributes to the sustainable investment product’s stated sustainability objective. For derivatives, we are not being prescriptive around how exposures should be calculated for the purposes of meeting any thresholds. Instead, firms should apply the rules based on the profile of their investment strategy and in the way that best reflects the economic and strategic reality of their exposures. We do not consider securities lending as being incompatible with sustainable investing as securities lending arrangements can be tailored to meet the sustainability objectives of the lending and borrowing parties. Firms should clarify their securities lending policy and the steps they will take to ensure this is coherent with their products’ sustainable investment strategies. We would also expect that any impacts on voting or broader stewardship activities as a result of securities

Indirect Indirect Direct Indirect and

60. We have also summarised how investment activities carried out in accordance with the 4 key financing strategies identified by GFANZ could be classified under our regime. Many firms that are in scope of our regime for investment labels and sustainability- related disclosures are signatories of the GFANZ. These firms may be interested in how investment activities carried out in accordance with the 4 key financing strategies identified by GFANZ would be The 4 strategies – defined in T owards a Global baseline for Net -zero T ransition Planning and elaborated in Defining T ransition Finance and Considerations for Decarbonization Contribution Methodologies – • Climate solutions. Financing or enabling the development and scaling of climate • Aligned. Financing or enabling entities that are already aligned to a 1.5 0 C pathway. • Aligning. Financing or enabling entities that are aligning to a 1.5 0 C pathway. • Managed phaseout. Financing or enabling the accelerated, managed phaseout of high-emitting physical assets. As long as other qualifying criteria for labelling are met, investment activities that meet the definitions of the 4 key financing strategies can be accommodated within the labelled product categories under our regime. For Climate solutions. Depending on a product’s sustainability objective and the robust, evidence-based standard that the firm references to select the product’s assets, a financing strategy for climate solutions may form part of the investment policy and strategy for any one of the labelled product categories.
For • a Sustainability Focus product may invest with reference to a robust, evidence- based standard that emphasises climate solutions • a Sustainability Impact product may be dedicated to scaling up investment in new climate solutions technologies • a Sustainability Improvers product may invest in companies with credible, strategic and rounded transition plans that look beyond their own decarbonisation to also consider how they can help accelerate whole-of- economy decarbonisation, including by adapting their business models to contribute to the delivery of climate solutions

Aligned and Aligning financing strategies are most likely to be found in Sustainability Improvers products. Both strategies direct financing to assets issued by companies that are still in transition. Therefore, even in the case of an Aligned financing strategy, the investment is unlikely to already meet a reasonable investor’s threshold for sustainability. Both Aligned and Aligning financing strategies – including, for example, products tracking a Paris-Aligned and Climate T ransition benchmark – may form part of the asset selection approach in a Sustainability Improvers product, where that product is directed towards a future 1.50 C emissions profile for assets. Managed phaseout. Relative to the other financing strategies, Managed Phaseout may be less prominent in a retail-oriented investment product. That said, the managed phaseout of high-emitting assets may be part of the transition plans of some companies included in the investments of a Sustainability Improvers product. Naming and marketing requirements for asset managers 61. Consumers must be able to navigate to both labelled and non-labelled products and be given clear, accurate information that will help them navigate the market and make informed investment decisions. So, in addition to the anti-greenwashing rule, we have introduced naming and marketing requirements for asset managers to help consumers differentiate between products that have sustainability objectives and use a label and those that have sustainability characteristics but do not use or qualify for a label. We have introduced requirements on the use of sustainability-related terms such as ‘green’, ‘climate’, ‘social’ etc, and any others that imply a product has sustainability characteristics. However, we have clarified that these rules do not apply when using the terms in other contexts eg financial impact, and when making short, factual, non-promotional statements, such as ‘Firm X produces its sustainability product reports annually’. 62. Labelled funds are restricted from using the term ‘impact’ in the product name unless the product uses the Sustainability Impact label. And specific rules apply to feeder funds, requiring them to use the same terms as the master fund, provide access to disclosures and produce the statement outlined in the relevant sections below. 63. The following requirements apply to products that do not use a label but that use sustainability-related terms in their names and • the product must have sustainability characteristics and the product’s name must accurately reflect those characteristics • the terms ‘sustainable’ , ‘sustainability’ and ‘impact’ (or another variation of those We clarify in guidance that the sustainability characteristics of a product should be material to that product, meaning, for example , that at least 70% of its assets have sustainability characteristics . 64. Other The naming rules and guidance are consistent with our Guiding Principles , which state that a fund that uses sustainability-related terms in its name could be misleading unless the fund pursues ESG/sustainability characteristics, themes or outcomes in a way that is substantive and material to the fund’s objectives, investment policy and strategy. We have simplified the wording • refer to sustainability characteristics only (as these characteristics may in turn be based around certain themes or pursuing certain outcomes); and • state that sustainability characteristics should be material to the product (which in turn means that those characteristics will be material to the fund’s objectives and/ or investment policy and strategy). We clarify that this means, for example, that at least 70% of the assets have sustainability characteristics. 65. Firms should consider whether it is appropriate to use terms that represent investment approaches such as ‘responsible’ in a fund name. In these cases, although the investment approach may be applied across the whole product, 70% of the product’s assets may not have sustainability characteristics as a result of applying that approach. For example, it may be misleading to use the term if, after applying a responsible investment approach across the product, the product only invests in a small percentage of assets that have sustainability characteristics. 66. A sustainability-related term may need to be qualified to accurately reflect a product’s sustainability characteristics, eg , ‘low-carbon tilt’ rather than ‘low carbon’. This may help to clarify that the majority of the product may not necessarily have sustainability characteristics. However, firms should consider whether it is appropriate to use the sustainability term eg , ‘low-carbon’ in the name of the fund and whether the use of that term may appear to overstate the product’s sustainability characteristics. We would not expect to see a term such as ‘low-carbon tilt’ in a product name if the product is only marginally tilted towards assets with sustainability characteristics. 67. In line with the anti-greenwashing rule and proposed guidance, firms should also consider the product name as a whole and how it may be interpreted by a consumer. This includes consideration of whether the use of sustainability-related terms in the name of a product range meets the requirements above, and remains appropriate for each particular product within that range. It also includes consideration of whether a consumer will understand a term like ‘ESG’ in a product name without further clarification as to what the sustainability characteristics or investment approach is. 68. Where a fund tracks a benchmark, the fund manager could choose not to use the name of the benchmark if the name does not meet our requirements, or should satisfy itself that the fund name meets the requirements. Benchmark administrators are in scope of the anti-greenwashing rule and must ensure their product names meet the rule. 69.
Firms can continue to use the terms in marketing (ie when communicating those terms in financial promotions) provided that the anti-greenwashing rule is met and the disclosures and statement set out below are produced. 70. Firms using sustainability-related terms in product names and marketing for products without a label must produce the same types of disclosures as for labelled products (consumer -facing, pre-contractual and ongoing product -level disclosures) so that consumers have consistent information across all products that use sustainability- 71. Firms using sustainability-related terms in product names and marketing must publish a statement in a prominent place on the relevant digital medium where the product is offered explaining why the product does not have a label. Our latest round of consumer research revealed this to be helpful to consumers. The statement must • an explanation as to the purpose of a label, using either the following standard text or an alternative which reflects the ‘Sustainable investment labels help investors find products that have a specific sustainability goal’ • a statement to clarify that the product does not have a label, using the following ‘This product does not have a UK sustainable investment label’ • a brief explanation as to why the product does not have a label 72. Where firms are not communicating sustainability-related terms in financial promotions via a digital medium, they should nevertheless take reasonable steps to ensure the content of the disclosures and statement above is communicated to retail clients as 73. Other Where it applies, firms should consider their obligations under the Consumer Duty whether promoting their products via digital or non-digital 74. Consumer -facing disclosures should provide consumers with better information on the key sustainability characteristics of investment products in a simple, accessible, consumer -friendly way to help them assess whether those products meet their needs 75. Our rules are consistent with the consumer understanding outcome under the Consumer Duty. Where the Duty applies, firms will need to ensure their communications meet the information needs of retail customers, are likely to be understood, and equip retail customers to make decisions that are effective, timely and properly informed. The information must be communicated in a way that is fair, clear and not misleading. 76. We also remind firms of the Consumer Duty’s requirements for tailoring a consumer disclosure appropriately to their needs and to ‘testing, monitoring, and adapting communications’, where appropriate, to support understanding and good outcomes. 77. We have set parameters for the format and content of consumer -facing disclosures to ensure some consistency for consumers, without introducing a template. For example,

disclosures must be clear, concise, easily read and understood, and no more than 78. All products using labels or sustainability-related terms in their names and marketing must produce consumer -facing disclosures. These must be short, standalone documents on a relevant digital medium (with hard copies kept for a minimum of 5 years and made available to consumers or us on request). 79. They must be kept up to date in accordance with the label or sustainability-related terms used, reviewed at least every 12 months, and updated every 12 months with progress towards the sustainability objective , where relevant . And if firms revise or cease to use a label, they must publish the updated the consumer -facing disclosure as soon as reasonably practicable, including the reasons for the revision and date of the revised 80. Consumer -facing disclosures must include the following 81. (In Ta b l e s 25, 26 and 27, disclosure items marked ‘L ’ must be included in the disclosures for products using labels and those marked with ‘NL ’ are the minimum information requirements for products using sustainability-related terms without a label. However disclosures for products not using labels may include other disclosure items below as Firm and product name, ISIN or other unique identifier, date of the L Label The label and the relevant descriptor for the label NL Statement Statement clarifying that the product does not have a label and why A summary of any material effect (or expected effect) on the financial risk and return as a result of the investment strategy to pursue the sustainability goal; progress towards achieving the goal; and where pursuing that goal may result in material negative environmental and/ The key sustainability characteristics of the assets that the product The types of assets held in the product for reasons other than to pursue the sustainability objective and why, and a summary of the investor stewardship approach in relation to the product. Mixed goals products must also disclose the proportion of assets invested in accordance with each sustainable investment category KPIs that demonstrate performance towards the objective, and Any other metrics that a consumer might find useful in understanding the investment policy and strategy for the product, and contextual

Further details Details as to where consumers can access pre-contractual disclosures, ongoing product -level disclosures, entity-level disclosures and non-sustainability-related information 82. Firms must clearly signpost the ‘sustainability goal’, ‘sustainability approach’ and ‘sustainability metrics’ as such. Disclosures relating to the sustainability goal and label descriptors, or statement clarifying that the product does not have a label, must be located in a prominent place in the consumer -facing disclosure. 83. Other We encourage industry to consider developing a template that can be used voluntarily, where this may be helpful. 84. A strategy may have a material impact on the financial return of the product where the firm has specifically decided to opt for sub-market returns while pursuing positive environmental and/or social outcomes. Detailed product-level disclosures 85. While the consumer -facing disclosures provide a summary of the key sustainability characteristics of a product, pre-contractual and ongoing product -level disclosures in a sustainability product report will provide more detail. This is intended to be useful for consumers that want to know more or for other stakeholders such as institutional 86. All products using labels or sustainability-related terms in their names and marketing must produce the detailed product -level disclosures.
Firms must keep these disclosures under review and update them as appropriate when revising or ceasing to use a label. 87. The key attributes of the product -level disclosures are as 88. Pre-contractual disclosures. These will be made either in a fund prospectus, prior disclosure document or sustainability product report (Part A) depending on the type of firm producing the disclosures. The disclosures must be clearly identifiable in the pre- contractual materials, which may be achieved by including the information in a dedicated section. Disclosures relating to the label and sustainability objective, or statement clarifying that the product does not have a label, must be located in a prominent place in the pre-contractual materials. 89. Pre-contractual disclosures must L Label The label used for the product NL Statement Statement clarifying that the product does not have a label and why

The sustainability objective; where the investment strategy to pursue the objective may result in a material effect (including expected effect) on the financial risk and return; the link between the objective and positive environmental and/or social outcome; and where pursuing that objective may result in material negative environmental Details of the investment policy and strategy for the product, including how the manager determines the assets the product invests in (eg, the criteria it applies to determine sustainability characteristics) L The robust, evidence-based standard of sustainability, including the basis on which the standard is considered appropriate and the function or third party that carried out the independent assessment L The proportion of assets invested in accordance with the sustainability objective and the types of assets that are held for other reasons, and why. L How the index providers’ methodology aligns with the product’s sustainability objective (where relevant) Details of the policies and procedures, and the KPIs, that the firm will use to monitor and demonstrate performance towards the NL Details of any other metrics a consumer may find useful in understanding the investment policy and strategy for the product Details of the investor stewardship strategy and resources to support achievement of the sustainability objective, including how that strategy will be applied and, where relevant, whether the firm is a signatory to the UK Stewardship Code L Escalation plan Any actions the firm will take in accordance with its escalation plan Specific disclosures associated with the relevant • Sustainability Improvers (eg, expected timescales for improvement and the types of evidence relied on), • Sustainability Impact (eg , the theory of change and method to measure and demonstrate impact) and • Sustainability Mixed Goals (eg, the proportion of assets invested in accordance with each sustainable investment category and the specific disclosures associated with each category) 2.1 Other Pre-contractual disclosures are largely a static document. We do not expect firms to make changes to these disclosures as a result of these rules, other than when first using a label, or revising or ceasing to use a label , as relevant. 2.2 Ongoing product-level disclosures. These disclosures must be made annually from when the firm starts to use the label for a product. They must be made in a Sustainability Product Report (Part B), which builds from the TCFD product report where firms are in scope of the TCFD-aligned disclosure requirements, or on demand (see below). 2.3 Ongoing product -level disclosures must L Label The label used for the product NL Statement Statement clarifying that the product does not have a label and why Details of the sustainability objective, progress towards achieving the objective, the proportion of assets invested in accordance with the sustainability objective and the types of assets held for other reasons Details of how the product is invested in accordance with its investment policy and strategy on an ongoing basis Details of the product’s performance against KPIs Details of any other relevant metrics that a consumer might find useful in understanding the investment policy and strategy for the Contextual information and historical annual calculations for the KPIs Details as to how the firm’s approach to the product materially deviates from its entity-level approach (where relevant) Details as to how investor stewardship has been applied, including activities undertaken and outcomes achieved (or expected to be achieved). These may include cross-references to Stewardship Code reporting, provided that information relevant to the product is clearly L Escalation plan Details of matters escalated Specific disclosures associated with the relevant • Sustainability Impact (eg , progress that the product is making towards achieving a positive impact) 90. On-demand. Where public disclosures are not appropriate, which may be the case for unauthorised AIFs not listed on a recognised exchange, the information above must be provided to eligible clients on demand. Eligible clients are those that need the information for their own sustainability-related disclosure requirements. Firms must respond to one request for the information per 12-month period (at a calculation date agreed with the client or at the most recent date the up-to-date information is available within the 12-month reporting period). Firms must provide the information to the client within a reasonable timeframe and in a format that meets the information needs of the client. However, firms are not required to produce on-demand disclosures before

Firms’ management of sustainability risks/opportunities 91. Disclosures on how firms are managing sustainability-related risks and opportunities in relation to products managed on behalf of clients and consumers enable those clients and consumers to take sustainability matters into account when granting mandates or 92. The disclosures must be made annually in a Sustainability Entity Report, which builds from the TCFD Entity Report, by all firms with assets under management of over £5 billion. Firms can cross-refer to disclosures made in a group or parent -level report, or another relevant report, provided the relevant information is clearly signposted and any material deviations from the group or parent approach are explained. Firms must also set out the rationale for doing so and include a compliance statement. 93.
Consistent with the TCFD’s (and ISSB’s) 4 pillars, firms are required to include details of their governance, strategy, risk management and metrics and targets in relation to managing sustainability-related risks and opportunities. In doing so, firms may consider disclosing the sustainability topics they prioritise, their impact on the environment and/ or society (having regard to GRI standards) and referring to the TCFD’s supplementary guidance for asset managers. They may also find the IFRS sustainability disclosure standard (IFRS S1), and the SASB standards relevant to help determine what information 94. Where a firm uses investment labels or sustainability-related terms in the naming and marketing of its products it must also include details of its resources, governance, and organisational arrangements in relation to those products. 95. Other We expect in-scope firms to be able to leverage their capabilities and processes built for climate-related disclosures to produce disclosures on the sustainability-related topics that they are prioritising in their governance, strategy, risk management, and metrics and targets. 96. We have referenced the IFRS S1, SASB standards and GRI standard as materials that may be useful for determining the content of disclosures. However, as they were developed for different purposes, we encourage firms to consider those documents through the lens of what information would be decision-useful for their clients and consumers. We would not expect line by line disclosures. We will monitor developments and consider whether and how to update the disclosure requirements over time. In addition, we encourage industry to develop guidance relating to disclosures for specific sectors, asset classes or sustainability topics. 97. Distributors (such as advisers and platforms) play a key role in communicating sustainability information to retail investors. 98. They are required to communicate the label and consumer -facing disclosures (both for labelled and unlabelled funds) to retail investors. This may be by displaying the label

prominently on the relevant digital medium (eg , product webpage), and by providing access to the consumer -facing disclosures, or otherwise communicating them to consumers via the distributors’ usual channels of communication. Distributors must also ensure the labels and disclosures are kept up-to-date in accordance with any changes the firm makes to their products. 99. Distributors and advisers are also subject to the anti-greenwashing rule and must therefore ensure all sustainability-related references comply with that rule. 100. Distributors must also provide a notice on overseas products (recognised schemes, including ETFs), to clarify that they are not subject to the UK sustainability disclosure and labelling regime. This must be in a prominent place on the relevant digital medium, along with a hyperlink to the relevant FCA webpage setting out further information on the regime for retail consumers, or otherwise communicated via the distributor’s usual channel of communication. The notice must be applied to products by 2 December 2024. 101. We continue to work with HMT on the approach to overseas funds. 102. Other We expect distributors to make the labels and consumer -facing disclosures available to retail investors as soon as reasonably practicable after the firm produces them, however we have not prescribed timelines within our rules. This approach recognises that firms are likely to apply labels to their products at different 103. We also remind distributors that the purpose of the rules is to meet the needs of retail investors. We expect distributors to take this into consideration when determining where and how to provide retail clients with access to the labels and consumer -facing

1. As part of our ESG strategy, we are committed to implementing rules that are coherent with international frameworks and standards as far as possible. 2. We recognise that many UK firms are already subject to the EU SFDR and have already invested in systems and processes to classify products according to the SFDR provisions. 3. We are introducing a labelling regime that categorises products to help consumers navigate the market, and one that is underpinned by clear, objective qualifying criteria. As a result, our starting point is different to the SFDR. However, the regimes are compatible, and firms should be able to use much of the information they already use for their product categorisation and disclosures under SFDR to meet our qualifying criteria and disclosure requirements. 4. Prior to the publication of our consultation, the US SEC also issued proposals that, similar to SFDR, categorise products to determine the disclosures that firms would be 5. In our consultation we provided a mapping of our proposals to requirements in the SFDR and US SEC’s proposals. Our assessment has broadly remained the same. However, to help firms we have provided an updated analysis of the criteria for labels in line with our final rules. The mapping below is to SFDR requirements only as the US SEC has yet to EU Sustainable Finance Disclosure Requirements 6. In our consultation we set out how Article 6, Article 8 and Article 9 funds under SFDR could map to our labels. T o complement this, below we have set out a summary of our qualifying criteria and the relevant information under SFDR that firms may leverage to support meeting the SDR requirement. SDR requirement SFDR requirement/information to leverage Sustainability objective that is clear, Some products may have a sustainability objective (eg Article 9 funds) At least 70% of its assets invested in accordance with a robust, evidence-based standard that is an absolute measure of environmental and/or social sustainability Proportion of investments with a sustainability objective/promoting sustainability characteristics.
However no specific link to a robust, evidence-based standard Robust and evidence-based KPIs to measure performance against the Measure the attainment of the sustainable investment characteristics/objective through

SDR requirement SFDR requirement/information to leverage Identify material negative environmental and/or social outcomes that may arise in pursuing the sustainability objective Disclosure of principal adverse impacts Identify assets held for reasons other than to pursue the sustainability objective Disclosure of the proportion of investments with a sustainability objective/promoting sustainability characteristics Monitor performance of the product in achieving the sustainability objective Measure the attainment of the sustainable investment characteristics/objective through Have an investment policy for achieving the sustainability objective and investment strategy for what the product Disclosure of investment strategy, Have an escalation plan in setting out the actions to be taken if the assets do not demonstrate sufficient performance against the sustainability objective Disclosure of engagement policies. (Firms may need to expand on this to set out an Obtain independent assessment of the standard for sustainability to confirm that it’s appropriate for asset selection/fit for Disclosures on whether assurance is provided under SFDR. However, ‘independent assessment’ in SDR is only limited to the sustainability standard (which can be via Ensure there are appropriate resources, arrangements, commensurate with the delivery of the sustainability objective No specific requirement under SFDR Identify and apply the investor stewardship strategy needed to deliver the sustainability objective, including the expected activities and outcomes Disclosure of engagement policies. (Firms may need to expand on this requirement under SDR eg, for other forms of stewardship) Where a product tracks an index, firms must only select an index that aligns with the general and specific criteria No specific requirement under SFDR Ensuring the labelling criteria are met on Monitoring requirements, (Firms may need to expand to capture all SDR requirements) 7. ESMA has proposed guidelines on fund names using ESG or sustainability-related terms. 8. In September 2023, the European Commission published a targeted consultation questionnaire, consulting on changes to SFDR. The questions in this consultation align in many ways with the rules and guidance we have set out in this PS. 9. We will monitor developments in this space and continue to support greater alignment and compatibility between the two regimes. This will be helpful to firms when assessing their products and will result in greater consistency in product information to help consumers navigate the market. 10. We have set out below a high -level summary of how our labels map to the current SFDR categories and those proposed in the SFDR consultation. * Article 8 funds would need to level up to qualify for the SDR labels Proposed SFDR consultation categories Product category products investing in assets specifically striving to offer targeted, measurable solutions to sustainability related problems that affect Product category products aiming to meet credible sustainability Product category products that exclude activities and/or investees involved in activities with negative sustainability effects Product category products with a transition focus aiming to bring measurable improvements to the sustainability profile of assets they invest in

Other international developments 11. Since we published our consultation there have been several developments in other jurisdictions that are looking to achieve similar outcomes around sustainability disclosures, naming and marketing and in some cases considering a labelling or product categorisation framework. For • The Australian Government ’s latest Sustainable Finance Strategy includes plans to develop a labelling system for investment products marketed as sustainable to retail investors, as well as pre-contractual and period ic information . • The Swiss Federal Department of Finance has also announced a planned consultation on efforts to address greenwashing, in line with the Swiss Federal Council’s position on greenwashing , which has many similarities to our approach. • The Dutch Authority for the Financial Markets proposed guidelines on making sustainability claims to help firms comply with existing requirements to ensure those claims are correct, clear and non-misleading. It also published a position paper on proposed improvements to SFDR in light of discussions on the European Commission’s review. This includes proposals to introduce ‘transition’ , ‘sustainable’ and ‘sustainable impact’ labels. 12. We will continue to engage with and support international policy makers as they consider their sustainability regimes, with a view to promoting compatibility to the extent possible. List of non-confidential respondents 2° Investing Initiative (2DII) Affirmative Investment Management Association for Financial Markets in Europe (AFME) Association of British Insurers (ABI) Association of Investment Companies (AIC) Association of Professional Compliance Consultants (APCC) Association of Real Estate Funds (AREF) Ayres Punchard Investment Management Limited Better Buildings Partnership (BBP)

BNY Mellon Investment Management Border to Coast Pension Partnership Limited British Private Equity & Venture Capital Association (BVCA) British Property Federation (BPF) British Vehicle Rental and Leasing Association (BVRLA) Brunel Pension Partnership Limited Carbon Intelligence, part of Accenture Carbon T racker and Planet T racker Chemical Industries Association (CIA) CMS Cameron McKenna Nabarro Olswang LLP Connected Asset Management Limited Depositary and T rustee Association (DA T A)

Eden T ree Investment Management Ethical Consumer Research Association Ltd European Association for Investors in Non-Listed Real Estate Vehicles (INREV) European Leveraged Finance Association (ELFA) Evelyn Partners Investment Management LLP Evenlode Investment Management Limited Eversheds Sutherland Financial Services FIA EPT A (European Principal T raders Association) Financial Markets Law Committee (FMLC) Financial Services Consumer Panel

Global Impact Investing Network (GIIN) Global Infrastructure Investor Association (GIIA) Global Legal Entity Identifier Foundation (GLEIF) Global Reporting Initiative (GRI) Investment Company Institute (ICI) and ICI Global Impact Investing Institute (III) Institute and Faculty of Actuaries (IFoA) Institute of Chartered Accountants in England and Wales (ICAEW) Institutional Investors Group on Climate Change (IIGCC) International Capital Market Association (ICMA) International Corporate Governance Network (ICGN) International Organization for Standardization (ISO), T ask Committee 68 Financial Services (TC68), Standards Advisory Group (AG2) International Regulatory Strategy Group (IRSG)

International Securities Lending Association (ISLA) International Swaps and Derivatives Association (ISDA) Investment Property Forum (IPF) J.P .
Morgan Asset Management (JPMAM) Keep It Easy Financial Planning Martin Currie Investment Management Ltd Melville Rodrigues Consulting LLP Neuberger Berman Europe Limited

Paradigm Norton Financial Planning Limited Personal Investment Management & Financial Advice Association (PIMFA) Principles for Responsible Investment (PRI) Royal Institution of Chartered Surveyors (RICS) Securities Industry and Financial Markets Association’s (SIFMA) Asset Management

T aylormade Financial Planning LLP T eachers Insurance and Annuity Association of America (TIAA) The Alternative Investment Management Association (AIMA) and the Alternative Credit The Global Steering Group for Impact Investment (GSG) The Investing and Saving Alliance (TISA) The Investment & Life Assurance Group (ILAG) UK Sustainable Investment and Finance Association (UKSIF) United Kingdom Shareholders Association (UKSA) and UK Individual Shareholders Universities Superannuation Scheme (USS) and Railpen Virgin Money Unit T rust Managers Limited (VMUTM)

A number of respondents requested their answers to be treated as confidential and we have also decided to treat some responses from individuals as confidential. Abbreviations used in this paper ACS Authorised Contractual Scheme AIF Alternative Investment Fund AIFM Alternative Investment Fund manager COLL Collective Investment Schemes Sourcebook DLAG Disclosures and Labels Advisory Group ESG Environmental, Social and Governance ESMA European Securities and Markets Authority FCA Financial Conduct Authority FRC Financial Reporting Council FSMA Financial Services and Markets Act GFANZ Glasgow Financial Alliance for Net Zero GIIN Global Impact Investing Network

GRI Global Reporting Initiative IFRS International Financial Reporting Standards IFRS S1 General requirements for disclosure of sustainability-related financial INED Independent Non-Executive Director IOSCO International Organization of Securities Commissions ISSB International Sustainability Standards Board KIID Key Investor Information Document PRI Principles for Responsible Investment SASB Sustainability Accounting Standards Board SDG Sustainable Development Goals SDR Sustainability Disclosure Requirements SEC Securities and Exchange Commission SFDR Sustainable Finance Disclosure Regulation SRI Socially Responsible Investing TCFD Ta s k fo rce on Climate-Related Financial Disclosures TPT T ransition Plan T askforce UCITS Undertakings for Collective Investment in T ransferable Securities

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A. The Financial Conduct Authority (“the FCA”) makes this instrument in the exercise of the following powers and related provisions in or (1) the following sections of the Financial Services and Markets Act 2000 (“the (a) section 137A (The FCA’s general rules); (b) section 137R (Financial promotion rules); (c) section 137T (General supplementary powers); (d) section 139A (Power of the FCA to give guidance); (e) section 247 (Trust scheme rules); (f) section 248 (Scheme particulars rules); (g) section 261I (Contractual scheme rules); and (h) section 261J (Contractual scheme particulars rules); (2) article 1(2) of the Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018; (3) regulation 6(1) of the Open-Ended Investment Companies Regulations 2001 (4) the other rule and guidance making powers listed in Schedule 4 (Powers exercised) to the General Provisions of the FCA’s Handbook. B. The rule-making provisions listed above are specified for the purposes of section 138G(2) (Rule-making instruments) of the Act. C. This instrument comes into force on 28 November 2023. D. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes to this instrument listed in Glossary of definitions Annex A Principles for Businesses (PRIN) Annex B Conduct of Business sourcebook (COBS) Annex C Conduct of Business sourcebook (ICOBS) Annex D Mortgages and Home Conduct of Business sourcebook

Conduct of Business sourcebook (BCOBS) Annex F Claims Conduct of Business sourcebook (CMCOB) Annex G Funeral Conduct of Business sourcebook (FPCOB) Annex H Product Intervention and Product Governance sourcebook Environmental, Social and Governance sourcebook (ESG) Annex J Collective Investment Schemes sourcebook (COLL) Annex K Consumer Credit Sourcebook (CONC) Annex L Investment Funds sourcebook (FUND) Annex M E. In the Annexes to this instrument, the notes (indicated by “Note:” or “Editor’s are included for the convenience of readers but do not form part of the legislative text. F. This instrument may be cited as the Sustainability Labelling and Disclosure of Sustainability-Related Financial Information Instrument 2023. Amendments to the Glossary of definitions In this Annex, underlining indicates new text and striking through indicates deleted text, Insert the following new definitions in the appropriate alphabetical position. The text is not a disclosure produced under ESG 5.2 in respect of a sustainability feeder fund (in ESG) any of the the revised Universal Standards 2021 (in effect from 1 January the International Financial Reporting Standard (IFRS) S1 General Requirements for Disclosure of Sustainability-related Financial Information published in June 2023. Available at the following [Editor’s insert link to issb/english/2023/issued/part-a/issb-2023-a-ifrs-s1-general- requirements-for-disclosure-of-sustainability-related-financial- master fund (in ESG) any of the (3) a qualifying master scheme or a single sub-fund of a qualifying master scheme that is an umbrella; or (4) a qualifying master LTAF or a single sub-fund of a qualifying master LTAF that is an umbrella. the information set out under ESG 5.5.13R(2) for a person who is entitled to such information under ESG 5.5.13R(1) in respect of assets under management in an unauthorised AIF in which the person is an investor, but only in respect of an unauthorised AIF which is a UK AIF managed by a full-scope UK AIFM or a small authorised UK AIFM and which is not listed on a recognised a disclosure produced under ESG 5.3 in respect of a sustainability (in ESG) one of the following (as applicable): (2) (if not within (1)) in relation to a full-scope UK AIFM, the prior disclosure of information required by FUND 3.2.2R.
a report comprising Part A (where applicable) and Part B, produced in accordance with ESG 5.5.1R to ESG 5.5.12R in respect of the following insofar as it is a sustainability (2) an unauthorised AIF which is a UK AIF managed by a full- scope UK AIFM or a small authorised UK AIFM which is listed on a recognised investment exchange; this includes an relevant digital medium (in ESG) a firm’s website and any mobile application or other digital medium that the firm may be using in relation to a environmental or social characteristics. (in ESG) a public report regarding the overall assets managed by a manager in relation to its sustainability in-scope business, produced in accordance with ESG 5.6. the following activities, as set out in more detail in ESG 3.1.2R: (2) managing an AIF which is a UK AIF. sustainability label any of the labels that are listed at ESG 4.1.1R(1). a statement of intention to undertake activities with the aim of directly or indirectly improving or pursuing positive environmental sustainability product any of the (1) an authorised fund, including, where the authorised fund is an umbrella scheme, each sub-fund of the umbrella; or (2) an unauthorised AIF that is a managed by a full-scope UK AIFM or a small authorised UK AIFM, unless it (b) a closed-ended AIF that makes no additional investments after 22 July 2013 (see regulation 74(1) of theory of change (in ESG) a comprehensive description and illustration of how and why a desired change is expected to occur in a particular context. Amend the following definitions as shown. (12) (in ESG) in addition to (1), (i) a unitholder or potential unitholder in a scheme; and (ii) to the extent not within (i), an investor or potential (6) (in ESG) in relation to a client, offering, selling, recommending, advising on, arranging, dealing, proposing or providing a

sustainability product or a recognised scheme (including an ETF that (5) (in ESG) a firm which offers, sells, recommends, advises on, arranges, deals, proposes or provides a sustainability product or a recognised scheme (including an ETF that is a recognised scheme). (4) (in ESG) in addition to (1) and (1A): (a) (in relation to an ACS) the authorised contractual scheme (b) (in relation to an ICVC which has not appointed a person to manage the scheme) the company; (c) a small authorised UK AIFM; and an on-demand TCFD product report or underlying asset data. the following activities, as set out in more detail in ESG 1.2.1R ESG (4) providing insurance-based investment products; (5) operating a personal pension scheme (excluding a SIPP) or stakeholder pension scheme; and (6) operating a SIPP, but only in relation to SIPPs which contain an insurance-based investment product, a unit, an interest in a closed- ended investment fund or a pre-set investment portfolio provided by

(5) an unauthorised AIF managed by a UK AIFM full-scope UK AIFM or a small authorised UK AIFM, unless it is a closed-ended AIF that makes no additional investments after 22 July 2013 (see regulation 74(1) of the AIFMD UK Regulation). : (a) a closed-ended AIF that makes no additional investments after 22 July 2013 (see regulation 74(1) of the AIFMD UK

Amendments to Principles for Businesses (PRIN) In this Annex, underlining indicates new text. 2A.3 Consumer retail customer outcome – products and services selecting distribution channels and providing information to 2A.3.12 R (1) A manufacturer must select distribution channels that are appropriate for the target market. (2) A manufacturer must provide each distributor with adequate information in good time to enable it to comply with the rules applicable to it in this section. (3) The information to be made available under (2) includes all appropriate information regarding the product and the product approval process from time to time to enable the distributor to G A manufacturer that is a manager is reminded of its obligations under ESG 4.1.8R and ESG 5.2.9R in meeting its obligations under PRIN 2A.3.12R. obtaining information from manufacturers 2A.3.16 R A distributor must ensure that the product distribution arrangements contain effective measures and procedures to obtain sufficient, adequate and reliable information from the manufacturer about the product (1) understand the characteristics of the product; (2) understand the identified target market; (3) consider the needs, characteristics and objectives of any retail customers in the target market with characteristics of vulnerability; (4) identify the intended distribution strategy for the product; and (5) ensure the product will be distributed in accordance with the needs, characteristics and objectives of the target market. G A distributor is reminded of its obligations under ESG 4.1.16R to ESG 4.1.19R in meeting its obligations under PRIN 2A.3.16R. Amendments to the Conduct of Business sourcebook (COBS) In this Annex, underlining indicates new text. 4 Communicating with clients, including financial promotions 4.1.1D G A firm is reminded of its obligations under the naming and marketing rules in ESG 4.3 (in particular, ESG 4.3.1R) when (1) communicates or approves a financial promotion that references the sustainability characteristics of a product or service; or (2) undertakes sustainability in-scope business in relation to a 4.10 Approving and confirming compliance of financial promotions Approving financial promotions 4.10.2C G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that makes reference to the sustainability characteristics of a product or service. 18.5 Residual CIS operators and small authorised UK AIFMs Format and content of fund documents

18.5.9A G A small authorised UK AIFM that uses a sustainability label, or one of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1), in relation to a UK AIF is reminded of its obligations in ESG 5.3 to ESG 5.5 relating to the preparation of Part A of a public product-level sustainability report. Amendments to the Conduct of Business sourcebook In this Annex, underlining indicates new text.
2.2 Communications to clients and financial promotions Pricing guidance on the clear, fair and not misleading rule Sustainability-related guidance on the clear, fair and not misleading rule 2.2.4A G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service. Amendments to the Mortgages and Home Conduct of Business sourcebook In this Annex, underlining indicates new text. 3A Financial promotions and communications with customers 3A.2 The fair, clear and not misleading rules Fair, clear and not misleading communications 3A.2.2A G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service. Amendments to the Conduct of Business sourcebook (BCOBS) In this Annex, underlining indicates new text. 2 Communications and financial promotions 2.2 The fair, clear and not misleading rule 2.2.7 G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service. Amendments to Claims Conduct of Business sourcebook (CMCOB) In this Annex, underlining indicates new text. 3 Financial promotions, and communications with customers 3.2 Financial promotions and communications – general standards The fair, clear and not misleading rule (2) In complying with that rule, firms (a) have regard to the average customer’s understanding of the services that the firm provides; (b) present information in a logical order; (c) use plain and intelligible language and, where the use of jargon or technical terms is unavoidable, explain the meaning of any jargon or technical terms; (d) make key information prominent and easy to identify, including by means of headings and the layout, display and font attributes of text, and by the use of design devices such as tables, bullet points and graphs; and (e) avoid unnecessary disclaimers. 3.2.2A G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service. Amendments to the Funeral Conduct of Business sourcebook (FPCOB) In this Annex, underlining indicates new text. 4 Communications and financial promotions 4.2 Communications and financial the obligations Fair, clear and not misleading rule 4.2.4A G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service. Amendments to the Product Intervention and Product Governance sourcebook (PROD) In this Annex, underlining indicates new text. 3.3 Distribution of products and investment services 3.3.2A G A distributor is reminded of its obligations under ESG 4.1.16R to ESG 4.1.19R in meeting its obligations under PROD 3.3.1R. Amendments to the Environmental, Social and Governance sourcebook (ESG) In this part of the Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. 1.1.2 G ESG 1A and ESG 2 contains contain rules and guidance regarding the disclosure of climate-related financial information consistent with TCFD Recommendations and Recommended Disclosures. G ESG 3 applies to all firms and sets out the way in which the rules and guidance in ESG 4 and ESG 5 apply to different types of firm. Although most of the rules in ESG 4 and ESG 5 apply to managers, a number of rules apply to distributors and some also apply to firms more generally. G ESG 4 sets out ‘anti-greenwashing’ rules and guidance which apply to a firm, regardless of whether or not it is undertaking sustainability in-scope business, with respect to references the firm makes about the sustainability characteristics of a product or service. ESG 4 also contains the rules and guidance which apply to a manager that is undertaking sustainability in-scope business, restricting the use of a sustainability label in relation to a sustainability product unless certain criteria are met and setting out naming and marketing conditions in relation to those products. In addition, ESG 4 contains rules and guidance which apply to distributors that distribute sustainability products and recognised schemes, including ETFs that are recognised schemes, to retail clients. ESG 5 contains the rules and guidance which apply to a manager undertaking sustainability in-scope business with respect to the consumer-facing disclosure, pre-contractual disclosure, public product-level sustainability report and (where applicable) on-demand sustainability information that the manager must produce in relation to a sustainability product, together with rules and guidance requiring a manager to produce an entity-level report. The TCFD-related disclosures are intended to help meet the information needs of market participants, including a firm’s institutional clients (e.g. pension trustees, employers and corporate investors) and consumers of their products (e.g. pension scheme members and retail investors), in relation to the climate-related impact and risks of a firm’s TCFD in-scope business. G The sustainability-related rules and guidance in ESG 4 and ESG 5 are also intended to help meet the information needs of market participants, including a firm’s retail clients and institutional clients in relation to the sustainability characteristics of a sustainability product and the sustainability-related risks and opportunities in relation to a manager’s sustainability in-scope business. 1.2.1 R (1) The rules in this sourcebook apply to a firm of a type listed in scope business carried out from an establishment maintained by it in the United Kingdom as described in column 2.
Column 1: Type of firm Column 2: TCFD in-scope Any firm Portfolio management UK UCITS management company Managing a UK UCITS Full-scope UK AIFM Managing an AIF Small authorised UK AIFM Managing an AIF Insurer or pure reinsurer Providing insurance-based

Other asset owners (other than relation to SIPPs containing any of the following provided by the Type of firm Applicable provisions ESG 2 (except for ESG 2.3.5R to ESG 2.3.8R relating to on-demand 1.2.2 R A firm is exempt from the disclosure requirements under ESG 2 if and for as long as the assets under administration or management in relation to its TCFD in-scope business amount to less than £5bn calculated as a 3-year rolling average on an annual assessment. [deleted] 1.2.3 G The specific application of the rules and guidance in ESG 2, ESG 4 and ESG 5 is set out in ESG 1A and ESG 3. rules in ESG 2, ESG 4 and ESG 5 apply to firms. ESG 4 (except for ESG 4.1.16R to ESG 4.1.19R relating to distributors) only in relation to UK UCITS and ESG 5 (except for ESG 5.5.13R to ESG 5.5.15R relating to on demand sustainability information) only in relation to UK UCITS and UK AIFs. A firm managing a feeder fund ESG 4.1.2R to ESG 4.1.8R, ESG A firm that is a full-scope UK AIF not listed on a recognised ESG 2 (except for ESG 2.3.1R to ESG 2.3.4R relating to a public ESG 4 (except for ESG 4.1.16R to ESG 4.1.19R relating to distributors) ESG 5 (except in relation to the preparation of Part B of a public product-level sustainability report) ESG 2 (except for ESG 2.3.5R to ESG 2.3.8R relating to on-demand Insert the following new chapter, ESG 1A (Application of ESG 2), after ESG 1 (Purpose and application). All of the text is new and is not underlined. 1A.1.1 R (1) The rules in ESG 2 apply to a firm of a type listed in column 1 of the carried out from an establishment maintained by it in the United Kingdom as described in column 2. Column 1: type of firm Column 2: TCFD in-scope Any firm Portfolio management Full-scope UK AIFM Managing an AIF Small authorised UK AIFM Managing an AIF Insurer or pure reinsurer Providing insurance-based Other asset owners (other than relation to SIPPs containing any of the following provided by the (b) an interest in a closed-ended (c) a pre-set investment portfolio 1A.1.2 R A firm is exempt from the disclosure requirements under ESG 2 if and for as long as the assets under administration or management in relation to its

TCFD in-scope business amount to less than £5bn calculated as a 3-year rolling average on an annual assessment. Amend the following text as shown. 2 Disclosure of climate related financial information 2.1 Preparation of climate-related reports (2) If a firm (including an OPS firm) receives a request for on-demand TCFD information from a person who is entitled to make such request under ESG 2.3.5R, it must prepare and provide the on-demand TCFD information to the person within a reasonable period of time and in a format which the firm, acting reasonably, considers appropriate to meet the information needs of that person. Content of a TCFD entity report 2.2.1 R (1) Subject to ESG 2.2.5R and ESG 2.2.6R, a firm must include in its TCFD entity report climate-related financial disclosures regarding the overall assets managed or administered by the firm in relation to its TCFD in- scope business as defined under ESG 1.2.1R ESG 1A.1.1R. On-demand TCFD product reports and underlying data 2.3.5 R (1) A client who requires on-demand TCFD information in order to satisfy climate-related financial disclosure obligations, whether under this chapter or as a result of other legal or regulatory requirements, is entitled to request such information from, and be provided with it by, the firm and to receive a response to that request in accordance with (2) On receipt of a request from a client under (1), a firm must provide on- demand TCFD information as at a calculation date determined in

Insert the following new chapters, ESG 3 (Application of ESG 4 and ESG 5), ESG 4 (Sustainability labelling, naming and marketing) and ESG 5 (Disclosure of sustainability- related information), directly before ESG TP 1 (Transitional provisions). The text is all new 3 Application of ESG 4 and ESG 5 3.1 Application of ESG 4 and ESG 5 to firms 3.1.1 R This chapter applies to all firms. Application of ESG 4 and ESG 5 3.1.2 R ESG 4 and ESG 5 apply as (1) ESG 4.1.1R(1) and ESG 4.3.1R apply to all firms. (2) In addition to the rules set out at ESG 3.1.2R(1), ESG 4.1.16R to ESG 4.1.19R apply to a distributor who distributes a sustainability product or a recognised scheme, including an ETF that is a recognised scheme, (3) Subject to ESG 3.1.3R, all the rules and guidance in ESG 4 and ESG 5 3.1.2R(4) in relation to the sustainability in-scope business described (a) is carried out from an establishment maintained by the manager (b) to the extent that it is not carried out from an establishment maintained by the manager in the United Kingdom, is carried Column 1: type of manager Column 2: sustainability in-scope accordance with ESG 2.1.9R or at an alternative calculation date where this has been agreed between the client and the firm. Full-scope UK AIFM Managing an AIF Small authorised UK AIFM Managing an AIF Exemption from ESG 5.6 for managers of assets below threshold 3.1.3 R A manager is exempt from the disclosure requirements under ESG 5.6 if and for as long as the assets under administration or management in relation to its sustainability in-scope business amount to less than £5bn calculated as a 3-year rolling average on an annual assessment.
3.1.4 R Where a firm delegates its activities to another person, that firm still remains responsible for ensuring compliance with the requirements of ESG 4 and ESG Meaning of assets in ESG 4 and ESG 5 3.1.5 R In ESG 4 to ESG 5, unless the context otherwise requires, a reference to the (1) the scheme property, in relation to an authorised fund; or (2) in relation to a sustainability product other than an authorised fund, the investments that the sustainability product makes. 4 Sustainability labelling, naming and marketing (1) Subject to ESG 4.1.1R(2), a firm must not make use of the following (b) ‘Sustainability improvers’; (c) ‘Sustainability impact’; or (d) ‘Sustainability mixed goals’. (2) A manager may, from 31 July 2024, make use of a sustainability label in ESG 4.1.1R(1) where the manager is undertaking sustainability in- scope business in relation to a sustainability (a) that is not a feeder fund if it satisfies the requirements set out in (b) that is a feeder fund if it satisfies the requirements in ESG 4.1.2R. 4.1.2 R Where a manager is undertaking sustainability in-scope business in relation to a sustainability product that is a feeder fund, it may use a sustainability label in relation to that product (1) the feeder fund uses the same label as that used by the relevant master fund which is a sustainability product; (2) the manager ensures that its use of the label is kept updated in accordance with any changes that the relevant master fund makes; and (3) the manager ensures that it provides clients with easy access (for example, by providing hyperlinks) to the consumer-facing disclosure, pre-contractual disclosure (or Part A of a public product-level sustainability report in circumstances where the sustainability product does not have pre-contractual materials that relate to it) and Part B of a public product-level sustainability report that has been produced by the 4.1.3 R As far as reasonably practicable, a manager must, where it makes use of a sustainability label, use the relevant graphic prescribed by the (1) when displaying that label in relation to a sustainability product on the relevant digital medium for the business of the manager; and (2) when disclosing the use of that label in a consumer-facing disclosure, a pre-contractual disclosure and Part B of a public product-level 4.1.4 G For the purposes of ESG 4.1.3R, the relevant graphic can be accessed through the FCA’s online notification and application system. 4.1.5 R A manager that uses a sustainability label must (1) use a sustainability label in a way that is misleading; (2) claim in a public statement or to a client, either expressly or by (a) the FCA has conferred or approved the use of a sustainability label in relation to a particular sustainability product; or

(b) the manager’s use of a sustainability label indicates that a sustainability product has been approved or endorsed by the (3) publish information in relation to the use of, or descriptors pertaining to, a sustainability label which contradicts the information that has been 4.1.6 R A manager that uses a sustainability label (1) prepare and retain a record as to the basis on which the label has been (2) keep that record updated for the duration of the label’s use (including where the use of the label changes, as set out under ESG 4.1.11R and 4.1.7 R A manager that intends to use a sustainability label in relation to a particular sustainability product, or to revise or cease the use of that label, must notify the FCA that it is doing so using the FCA’s online notification and application system, either before using, revising or ceasing the use of that label or as soon as reasonably practicable afterwards. Publication of sustainability labels 4.1.8 R (1) Where a manager uses a sustainability label in relation to a sustainability product and makes information about that product publicly available, it must publish on the relevant digital medium for the (a) the label that has been applied to the relevant sustainability (b) details as to where the consumer-facing disclosure pertaining to that product can be easily accessed. (2) A manager must locate the information at ESG 4.1.8R(1) in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is offered. 4.1.9 G In addition to the information required under ESG 4.1.8R, a manager may choose to provide further information in relation to the sustainability label by including a hyperlink to the relevant webpage of the FCA’s website on the relevant digital medium for the business of the manager.
The hyperlink should be located at a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is

4.1.10 G For the purposes of the rules and guidance in ESG 4 and ESG 5, a ‘prominent place’ should take account of the content, size and orientation of the information pertaining to the sustainability product (or, in the case of ESG 4.1.19R, a recognised scheme, including an ETF that is a recognised scheme) on the relevant webpage or page of the mobile application or other digital Reviewing sustainability labels 4.1.11 R A manager that uses a sustainability label in relation to a sustainability product that is not a feeder fund must, in addition to the general ongoing requirements under ESG 4.2.20R, keep the use of that label under review by taking (1) A manager must review its use of a sustainability label prior to any proposed change to a sustainability product and if, as a result of those changes, the product will cease to meet the criteria for using that label under ESG 4.2, revise or cease the use of the label as appropriate as soon (2) Notwithstanding ESG 4.1.11R(1), a manager (a) review its use of a sustainability label at least every 12 months to determine whether the use of the label continues to be appropriate, including in circumstances where the manager has taken steps under ESG 4.2.22R; and (b) where the manager determines that the continued use of the label is not appropriate, revise or cease the use of the label as appropriate as soon as reasonably practicable. 4.1.12 R A manager must prepare and retain a record of the fact that it has undertaken a review under ESG 4.1.11R and the decision it has reached as a result of that review regarding whether the sustainability label it has used remains 4.1.13 R A manager must, where it is required to either revise the sustainability label that it uses or cease to use that label under ESG 4.1.11R: (1) give written notice to its clients who have invested in that product that the sustainability label has been revised or ceased and the reasons for that revision or cessation as soon as reasonably practicable; (2) publish the revised sustainability label (or the fact that the manager has ceased to use a label) and the reasons for the revision or cessation on the relevant digital medium for the business of the manager in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is offered, as soon as reasonably practicable before that change takes effect; and

(3) ensure that a consumer-facing disclosure, pre-contractual disclosure and reports prepared by the manager under ESG 5.4 and ESG 5.5 are updated as soon as reasonably practicable, in accordance with the requirements under ESG 5.1.3R where relevant. 4.1.14 R If, in circumstances other than those set out in ESG 4.1.11R, a manager is no longer able to meet the general or specific criteria for using a sustainability label and must revise or cease the use of the label, it must take the steps under 4.1.15 G For the purposes of ESG 4.1.13R(1), authorised fund managers are reminded of their obligations under, as relevant, COLL 4.3, COLL 8.3 or COLL 15.5, as a change in the use of a sustainability label is likely to require pre-event 4.1.16 R Where a distributor distributes to retail clients a sustainability product which uses a sustainability label, the distributor (1) communicate to those retail clients the same label that the manager undertaking sustainability in-scope business is using in relation to that (a) displaying the label on the relevant digital medium for the business of the distributor in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is offered; or (b) where the distributor does not use a relevant digital medium, using the same channel(s) that the distributor would ordinarily use to communicate information; and (2) ensure that retail clients are provided with access to a consumer-facing disclosure which relates to that product. 4.1.17 R Where a manager does not use a sustainability label but uses one or more of the terms listed in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1) in the name or a financial promotion relating to a sustainability product, a distributor of that product must ensure that retail clients are provided with access to the consumer-facing disclosure which relates to that product. 4.1.18 R A distributor that distributes a sustainability product to retail clients must ensure that its relevant digital medium, or any other channel(s) that the distributor would ordinarily use to communicate information, and any financial promotion relating to that product are kept updated in accordance with any changes that are made to the relevant sustainability label or to the consumer- facing disclosure which relates to that product. 4.1.19 R A distributor that distributes recognised schemes, including ETFs that are recognised schemes, to retail clients

(1) where the terms set out in ESG 4.3.2R(2) are used in either the name of a recognised scheme or a financial promotion relating to that scheme, prepare a notice which includes the following ‘This product is based overseas and is not subject to UK sustainable investment labelling and disclosure requirements’; and (2) in relation to the relevant digital medium for the business of the (a) display the notice at ESG 4.1.19R(1) in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the recognised scheme is offered; or (b) include a hyperlink to the relevant webpage of the FCA website which sets out for retail clients further information in relation to the sustainability labelling and disclosure requirements under (3) where relevant, in relation to any other channel(s) that the distributor would ordinarily use to communicate information, notify retail clients using that means of communication.
4.2 Criteria for applying sustainability labels 4.2.1 R A manager must, in order to use a sustainability label in relation to a sustainability product under ESG 4.1.1R(2)(a), ensure that both the general and specific criteria which relate to that particular label have been met and continue to be met on an ongoing basis. 4.2.2 G ESG 4.2 sets out the relevant general and specific criteria and the ongoing responsibilities of a manager with respect to meeting those criteria, and ESG 5 sets out the locations at which information associated with the criteria must be disclosed, either in a consumer-facing disclosure, a pre-contractual disclosure, Part B of a public product-level sustainability report or in a sustainability entity 4.2.3 G A manager is reminded of ESG 3.1.4R – namely, that where it delegates its activities to another person it still remains responsible for ensuring compliance General general features of a sustainability product using a sustainability 4.2.4 R A sustainability product using a sustainability label (1) have an explicit sustainability objective as part of its investment (a) aligns with one of the sustainability labels set out under ESG 4.1.1R (as detailed further under ESG 4.2.13R, ESG 4.2.14R, ESG 4.2.16R and ESG 4.2.18R); and

(b) is clear, specific and measurable; (2) meet the following (a) at least 70% of the gross value of the product’s assets must be invested in accordance with its sustainability objective, except (i) the product is still to be fully invested in assets, as set out in the product’s investment strategy under ESG (ii) the manager is taking steps under ESG 4.2.22R. (b) the product’s assets must be selected with reference to a robust, evidence-based standard that is an absolute measure of environmental and/or social sustainability, as applicable under ESG 4.2.13R, ESG 4.2.14R and ESG 4.2.17R(1); and (c) where the product invests in assets that are not in accordance with its sustainability objective, those assets must not have attributes that conflict with that objective; and (3) have robust and evidence-based key performance indicators (KPIs) that can demonstrate the product’s progress towards meeting its 4.2.5 G A manager may, in determining the sustainability objective of a sustainability product, refer to the standards produced by the Sustainability Accounting Standards Board in order to help determine the topics that a retail client would reasonably associate with sustainability characteristics. 4.2.6 G In relation to ESG 4.2.4R(2)(a), not meeting the 70% threshold is only likely to be justified in relation to sustainability products that are designed to build their initial portfolio over time, such as may be in the case of an LTAF. 4.2.7 G In relation to ESG 4.2.4R(2)(b), assets should be selected using a methodology (1) is applied in a systematic way; and (2) may be based on, or determined by, an authoritative body, industry practice or a proprietary methodology for (a) the sustainability characteristics of a product’s assets; and (b) the ability of those assets to contribute to a positive environmental or social outcome. 4.2.8 G The KPIs under ESG 4.2.4R(3) should measure the sustainability product’s progress towards achieving its sustainability objective and/or the performance of individual assets towards achieving that objective. General manager requirements in relation to the use of a sustainability label 4.2.9 R A manager must, in addition to ensuring that a sustainability product meets the requirements set out in ESG 4.2.4R: (1) determine whether pursuing that product’s sustainability objective could result in negative environmental and/or social outcomes; (2) determine the sustainability product’s: (a) investment policy for achieving its sustainability objective; and (b) investment strategy for meeting the requirements under ESG 4.2.4R(2), including, where appropriate, the timescales by which the product is expected to be fully invested in assets; (3) obtain or undertake an assessment of the standard referred to under ESG 4.2.4R(2)(b) to confirm that it is appropriate for determining which assets the product invests in, ensuring (a) the assessment, whether obtained from a third party or undertaken by the manager, is independent from the manager’s (b) the individuals responsible for carrying out the assessment are (4) identify any assets which the sustainability product invests in for reasons other than to pursue its sustainability objective; (5) identify the KPIs that the manager will use for the purposes of ESG (6) have an escalation plan setting out the actions that the manager will take if any of the sustainability product’s assets do not demonstrate sufficient performance against either the product’s sustainability objective or the (7) in relation to the manager’s governance and resources, ensure (a) there are appropriate resources, governance and organisational arrangements in place, commensurate with enabling the sustainability product to achieve its sustainability objective; (b) there is adequate knowledge and understanding of the assets in which the sustainability product is invested; and

(c) there is a high standard of diligence in the selection of any data or other information used (including when third-party ESG data or ratings providers are used) to inform investment decisions for the sustainability product; and (8) in relation to investor (a) identify the investor stewardship strategy needed to support the achievement of the sustainability product’s sustainability objective, including the activities which are expected to be undertaken and the outcomes which are expected to be achieved; (b) ensure that the investor stewardship strategy and appropriate resources are applied in order to support the achievement of the 4.2.10 G In meeting the requirements of ESG 4.2.9R(6), a manager should, where possible, include in its escalation plan its anticipated timescales for addressing any matters that may result in insufficient performance by the sustainability product’s assets against the product’s sustainability objective.
4.2.11 R A manager must, with respect to a sustainability product that is an index- tracking product, only use an index that has a methodology which is aligned with the product’s sustainability objective and the requirements in ESG 4.2.12 R A manager must, in addition to the general criteria under ESG 4.2.4R to ESG 4.2.11R, ensure that a sustainability label is only used in relation to a sustainability product if the product meets the specific criteria applicable to that Specific sustainability focus 4.2.13 R A manager may only use the ‘sustainability focus’ label where the sustainability product’s sustainability objective is consistent with the aim of investing in assets that are environmentally and/or socially sustainable, determined using the robust, evidence-based standard set out under ESG Specific sustainability improvers 4.2.14 R A manager may only use the ‘sustainability improvers’ label where the sustainability product’s sustainability objective is consistent with the aim of investing in assets that have the potential to improve environmental and/or social sustainability over time, determined by the potential of those assets to meet the robust, evidence-based standard set out under ESG 4.2.4R(2)(b). 4.2.15 R A manager must, in relation to the use of the sustainability label ‘sustainability (1) identify the period of time by which the product and/or the assets in which the product invests is expected to meet the robust, evidence- based standard set out under ESG 4.2.4R(2)(b); (2) identify short and medium-term targets for improvements in the sustainability of the product and/or the assets in which the product invests, commensurate with the investment horizon of the product; and (3) obtain robust evidence to satisfy itself that the assets in which the product invests have the potential to meet the robust, evidence-based standard set out under ESG 4.2.4R(2)(b). Specific sustainability impact 4.2.16 R A manager may only use the ‘sustainability impact’ label where the sustainability product’s sustainability objective is consistent with the aim of achieving a pre-defined, positive, measurable impact in relation to an environmental and/or social outcome. R A manager must, in relation to the use of the sustainability label ‘sustainability specify a theory of change in line with the product’s sustainability objective, describing how the manager expects its investment activities and the product’s assets to contribute to achieving a positive and measurable impact, in accordance with the robust, evidence-based standard set out under ESG 4.2.4R(2)(b) where the manager considers (2) specify a robust method to measure and demonstrate that the manager’s investment activities and the product’s assets are achieving a positive environmental and/or social impact. Specific sustainability mixed goals A manager may only use the ‘sustainability mixed goals’ label where the sustainability product’s sustainability objective is to invest in accordance with 2 or more of the sustainability objectives in ESG 4.2.13R, ESG 4.2.14R and ESG 4.2.19 R A manager must, in relation to the use of the sustainability label ‘sustainability (1) identify the proportion of assets which are invested in accordance with each of the 2 or more sustainability objectives referred to in ESG

(2) meet the requirements (as relevant) under ESG 4.2.15R and ESG Manager requirements on an ongoing basis 4.2.20 R A manager must ensure that the general and specific criteria with respect to using a sustainability label are met on an ongoing basis, in (1) The manager must ensure (a) the requirements in ESG 4.2.4R continue to be met; (b) the sustainability product’s investment policy, strategy and escalation plan under ESG 4.2.9R(2) and ESG 4.2.9R(6) are (c) the independent assessment obtained under ESG 4.2.9R(3) (d) the manager continues to maintain appropriate governance and resources in accordance with the requirements under ESG (e) the manager continues to maintain an appropriate investor stewardship strategy and apply that strategy and its resources in accordance with the requirements under ESG 4.2.9R(8); and (a) monitor whether pursuing the sustainability product’s sustainability objective could result in negative outcomes that have not already been identified under ESG 4.2.9R(1). (b) monitor whether the sustainability product is investing in assets that pursue its sustainability objective and identify any new assets that have not already been identified under ESG 4.2.9R(4); (c) monitor the ongoing performance of the sustainability product in achieving its sustainability objective, measured against the product’s KPIs set out under ESG 4.2.4R(3). 4.2.21 R A manager must, in relation to a sustainability product that is an index-tracking product, ensure that the index continues to meet the requirements of ESG 4.2.4R(2) when that index is rebalanced. 4.2.22 R (1) A manager must, when ensuring the matters set out in ESG 4.2.20R are (a) apply, as appropriate, its escalation plan under ESG 4.2.9R(6) where the product’s assets do not demonstrate sufficient

performance against the product’s sustainability objective and/or the KPIs under ESG 4.2.4R(3); and (b) subject to ESG 4.2.25R, ensure that, if a sustainability product ceases to meet the general or specific criteria with respect to using a sustainability label, it takes action to restore compliance as soon as reasonably practicable. (2) A manager that is undertaking the steps set out in ESG 4.2.22R(1) will be complying with the general and specific criteria with respect to using 4.2.23 G Where a manager is taking action under ESG 4.2.22R(1)(b) with respect to restoring compliance with ESG 4.2.3R(2)(a), the FCA would ordinarily expect only minimal deviations from the requirements under ESG 4.2.3R(2)(a). 4.2.24 G In relation to ESG 4.2.22R(2), a manager is reminded of its obligation under ESG 4.1.11R(2) to ensure that it reviews its use of a sustainability label at least every 12 months to determine whether the label continues to be appropriate. 4.2.25 R A manager must, where the steps taken under ESG 4.2.22R are not sufficient for ensuring ongoing compliance with the general and specific (1) revise or cease the use of a sustainability label as soon as reasonably (2) take the steps set out under ESG 4.1.13R.
4.2.26 R Where a manager uses a sustainability label in relation to a sustainability product, it must take reasonable steps to ensure that the data it is relying upon in order to meet the requirements under ESG 4.2 is accurate and complete (including using proxies and assumptions where appropriate). 4.3.1 R (1) This rule applies to a firm (whether it is undertaking sustainability in- (a) communicates with a client in the United Kingdom in relation to (b) communicates a financial promotion to, or approves a financial promotion for communication to, a person in the United (2) A firm must ensure that any reference to the sustainability characteristics of a product or service (a) consistent with the sustainability characteristics of the product

(b) fair, clear and not misleading. Use of sustainability-related terms in relation to a sustainability product 4.3.2 R (1) A manager that is undertaking sustainability in-scope business for retail clients in relation to a sustainability product must comply with the requirements in ESG 4.3.4R to ESG 4.3.8R where the manager uses the terms in ESG 4.3.2R(2) in either the sustainability product’s name or in a financial promotion in relation to the sustainability characteristics of (2) For the purposes of ESG 4.3.2R(1), the relevant terms (a) ‘ESG’ (or ‘environmental, social and governance’); (b) ‘environment’, ‘environmental’ or ‘environmentally’; (e) ‘sustainable’ or ‘sustainability’; (k) ‘sustainable development goals’ or ‘SDG(s)’; (m) any other term which implies that a sustainability product has sustainability characteristics. (3) A manager may use the terms in ESG 4.3.2R(2): (a) to make short factual statements which are not financial (b) to make statements in a context not intended to refer to, or describe, the sustainability characteristics of a sustainability 4.3.3 G Examples of circumstances which may fall within ESG 4.3.2R(3) include references to ‘financial impact’ or ‘economic climate’, or a statement about who is ‘responsible’ for providing services in relation to a sustainability product. Use of sustainability-related terms in the name of a sustainability product 4.3.4 R (1) A manager that uses a sustainability label in relation to a sustainability product (other than a feeder fund) may use the terms set out in ESG 4.3.2R(2) in the product’s name provided that the manager complies (2) Where a manager is using a ‘sustainability focus’, ‘sustainability improvers’ or ‘sustainability mixed goals’ sustainability label, the manager must not use the word ‘impact’ in the product’s name. 4.3.5 R A manager that is undertaking sustainability in-scope business and does not use a sustainability label in relation to a sustainability product (other than a feeder fund) may use the terms set out in ESG 4.3.2R(2) in the product’s name provided that the following conditions are (1) The sustainability product (a) have sustainability characteristics and a name which accurately reflects those characteristics; and (b) not, in its name, use the terms ‘sustainable’, ‘sustainability’ or ‘impact’ or any other variation of those terms to refer to the sustainability characteristics of the product. (a) a consumer-facing disclosure; (b) a pre-contractual disclosure (or Part A of a public product-level sustainability report in circumstances where the product does not have pre-contractual materials that relate to it); and (c) Part B of a public product-level sustainability report. (3) The manager must publish the following information on the relevant digital medium for the business of the manager in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is (a) an explanation as to the purpose of a sustainability label, using either the standard text – ‘Sustainable investment labels help investors find products that have a specific sustainability goal’ – or alternative text which reflects the substance of the standard (b) a statement as to the fact that the product does not use a sustainability label, using the ‘This product does not have a UK sustainable investment label’; and

(c) a brief explanation as to why the product does not use a 4.3.6 G In relation to ESG 4.3.5R: (1) In relation to ESG 4.3.5R(1)(a), the sustainability characteristics of a sustainability product should be material to that product – for example, at least 70% of its assets should have sustainability characteristics. (2) In relation to ESG 4.3.5R(3)(a), a manager may choose to provide further information regarding the sustainability label by including a hyperlink to the relevant webpage of the FCA’s website on the relevant digital medium for the business of the manager. The hyperlink should be in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is 4.3.7 R A manager that is undertaking sustainability in-scope business in relation to a sustainability product that is a feeder fund must, where it intends to use the terms in ESG 4.3.2R(2) in the product’s name, ensure (1) the feeder fund uses only terms that are consistent with those used by the relevant master fund which is a sustainability product; (2) the manager provides clients with easy access (for example, by providing hyperlinks) to the information set out under ESG 4.3.5R(2), produced by the relevant master fund; and (3) the manager complies with the requirements of ESG 4.3.5R(3). Use of sustainability-related terms in financial promotions relating to a sustainability 4.3.8 R (1) This rule applies to a manager which communicates a financial promotion to a retail client in the United Kingdom. (2) A manager must ensure that any financial promotion relating to a sustainability product is consistent with (if any) the sustainability label, consumer-facing disclosure, pre-contractual disclosure and Part B of a public product-level sustainability report relating to that product.
(3) Where a manager is not using a sustainability label in relation to a sustainability product but communicates the terms in ESG 4.3.2R(2) in a financial promotion relating to that product, it (a) in relation to a sustainability product which is not a feeder fund, comply with the requirements in ESG 4.3.5R(2) and ESG

(b) in relation to a sustainability product which is a feeder fund, comply with the requirements of ESG 4.3.7R(1) to ESG 4.3.9 G The requirements in ESG 4.3.8R are without prejudice to the need to ensure that the relevant financial promotion is fair, clear and not misleading. 4.3.10 G Where a manager is not using a relevant digital medium to communicate the terms in ESG 4.3.2R(2) in a financial promotion, the manager should take reasonable steps to ensure the content required in ESG 4.3.5R (2) and ESG 4.3.5R(3) is communicated to retail clients as appropriate. 5 Disclosure of sustainability-related information 5.1 Preparation of sustainability disclosures 5.1.1 R (1) A manager must prepare the disclosures in ESG 5.1.1R(2) in accordance (a) is undertaking sustainability in-scope business in relation to a sustainability product that is not a feeder fund; and (b) uses either a sustainability label or one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1) in relation to (a) a consumer-facing disclosure for retail clients as set out under (b) a pre-contractual disclosure as set out under ESG 5.3. Reviewing consumer-facing disclosures and pre-contractual disclosures 5.1.2 R (1) A manager must ensure that the consumer-facing disclosure and the pre- contractual disclosure for the sustainability product remain consistent with the sustainability label or the terms set out in ESG 4.3.2R(2) that are used in accordance with ESG 4.3.2R(1) in relation to the product. (2) A manager must keep a consumer-facing disclosure and a pre- contractual disclosure under review, as (a) in relation to a consumer-facing disclosure, a manager must, at least every 12 months, review the disclosure and provide any updates as appropriate to ensure it accurately reflects the sustainability product – in (i) the manager must, where it uses a sustainability label, at a minimum provide an update on the progress of the

sustainability product in achieving its sustainability (ii) in providing any updates, the manager must ensure that up-to-date metrics and information are used; (b) in relation to a consumer-facing disclosure and a pre-contractual disclosure, a manager must review the disclosure prior to any proposed change to a sustainability product and make any updates as appropriate to ensure that it continues to reflect the sustainability product accurately. 5.1.3 R (1) This rule applies where a manager has revised a consumer-facing disclosure or a pre-contractual disclosure when either ceasing or revising the use of a sustainability label in relation to a sustainability (2) The manager must publish, as soon as reasonably practicable, the information specified in ESG 5.1.3R(3) on the relevant digital medium for the business of the manager, in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is offered.
(3) The information which must be published in accordance with ESG (a) the revised consumer-facing disclosure or pre-contractual (b) the reasons for the revision; and (c) in the case of a consumer facing disclosure, the date of the 5.2 Consumer-facing disclosures 5.2.1 R A manager that is required to prepare and publish a consumer-facing disclosure under ESG 5.1.1R must include in the consumer-facing disclosure for the (1) where it uses a sustainability label in relation to a sustainability product, the information in ESG 5.2.2R; or (2) where it does not use a sustainability label in relation to a sustainability product, but uses one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1), the information set out (a) ESG 5.2.2R(1) to ESG 5.2.2R(4), ESG 5.2.2R(7)(a) and (b), ESG 5.2.2R(8)(b) and (c) and ESG 5.2.2(9); and

5.2.2 R For the purposes of ESG 5.2.1R, a manager must include the following information in the consumer facing disclosure which relates to a sustainability (2) the name of the sustainability product to which the consumer-facing (3) the date of the disclosure; (4) the International Securities Identification Number (ISIN) or other unique identifier (if any) for that sustainability product; (5) the sustainability product’s sustainability objective, clearly signposted as the ‘sustainability goal’ for that product, including a summary (a) any material effect (including expected effect) on the financial risk and return of the product as a result of the investment strategy the manager has adopted to pursue the product’s (b) the product’s progress towards achieving its sustainability (c) any material negative environmental and/or social outcomes that may arise when pursuing the product’s sustainability objective, as identified under ESG 4.2.9R(1); (6) the sustainability label which the manager is using in relation to that sustainability product, together with the relevant descriptor for that (a) for the sustainability label ‘sustainability focus’, the relevant descriptor ‘invests mainly in assets that focus on sustainability (b) for the sustainability label ‘sustainability improvers’, the relevant descriptor ‘invests mainly in assets that may not be sustainable now, with an aim to improve their sustainability for people or the planet over time’; (c) for the sustainability label ‘sustainability impact’, the relevant descriptor ‘invests mainly in solutions to sustainability problems, with an aim to achieve a positive impact for people or (d) for the sustainability label ‘sustainability mixed goals’, the relevant descriptor ‘invests mainly in a mix of assets that either focus on sustainability, aim to improve their sustainability

over time, or aim to achieve a positive impact for people or the (7) a summary of the manager’s investment policy and strategy in relation to the sustainability product’s sustainability characteristics (including, where relevant, the sustainability product’s sustainability objective) which uses plain English language to describe the policy and strategy effectively and accurately to retail clients and (a) is clearly signposted as the manager’s ‘sustainability approach’; (b) sets out the key sustainability characteristics of assets in which that sustainability product will and will not invest; (c) details any types of asset that the product invests in for reasons other than to pursue its sustainability objective and why the product invests in those assets; and (d) summarises the manager’s approach to investor stewardship in supporting the achievement of the sustainability product’s (8) a summary of the relevant metrics in relation to that sustainability product, calculated using the most up-to-date data available as at the time of preparing the consumer-facing disclosure, which is clearly signposted as the manager’s ‘sustainability metrics’ and sets (a) the product’s progress towards achieving the product’s sustainability objective, measured against the KPIs that the manager uses under ESG 4.2.4R(3); (b) any other metrics that a retail client might reasonably find useful in understanding the sustainability characteristics of the product; (c) any relevant contextual information, such as an explanation of how the metrics in ESG 5.2.2R(8)(a) and (b) should be (9) details (including, as appropriate, hyperlinks) as to where a retail client can easily access the following (a) the relevant pre-contractual disclosure in relation to the sustainability product, including, where applicable, Part A of the public product-level sustainability report in relation to that (b) Part B of the public product-level sustainability report in relation (c) the manager’s sustainability entity report; and

(d) other non-sustainability related information in relation to a sustainability product – for example, costs and charges that are associated with that product; and (10) for a manager that uses the ‘sustainability mixed goals’ sustainability label, details as to the proportion of the sustainability product’s assets which are invested in accordance with each of the 2 or more sustainability objectives referred to in ESG 4.2.18R. 5.2.3 G In relation to ESG 5.2.1R(2)(a), a manager may choose to disclose any further information in ESG 5.2.2R that it considers appropriate to include in a 5.2.4 R A manager must ensure that the information at either ESG 5.2.1R(2)(b) or ESG 5.2.2R(5) (as applicable), together with the information at ESG 5.2.2R(6), is located in a prominent place at the front of the consumer-facing disclosure. 5.2.5 G Where applicable, a manager may, for the purposes of ESG 5.2.2R(9)(d), choose to refer to documents such as the key information document, the key investor information document or the NURS-KII document in relation to the particular sustainability product. 5.2.6 R A manager must ensure that a consumer-facing disclosure is clear, concise and can be easily read and understood by retail clients and that it does not exceed 2 pages of printed A4 paper in length. 5.2.7 G In relation to ESG 5.2.6R, a manager is reminded of its obligations under PRIN 2A.5.8R to PRIN 2A.5.12R in tailoring a consumer disclosure appropriately to the needs of its retail clients. 5.2.8 R A manager must ensure it keeps a copy of each version of its published consumer-facing disclosure for a minimum of 5 years and provides a copy to a retail client or the FCA on request.
Publication of a consumer-facing disclosure 5.2.9 R (1) A manager must publish a consumer-facing disclosure on the relevant digital medium for the business of the manager in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is offered. (2) A manager must ensure that, in publishing a consumer-facing disclosure, it is easy for retail clients (including prospective retail (a) identify the particular sustainability product to which the consumer-facing disclosure relates; (b) identify the relevant sustainability label (if any); and (c) access the information set out at ESG 5.2.2R(9). 5.2.10 G If a manager chooses to use a hyperlink in order to comply with ESG 5.2.9R(2), it should ensure that the consumer-facing disclosure is available at no more than one mouse click away from the specific webpage at which the relevant sustainability label (if any) is located. 5.3 Pre-contractual disclosures 5.3.1 R A manager that is required to prepare and publish a pre-contractual disclosure under ESG 5.1.1R must do so in a clear and accessible way and include that (1) the pre-contractual materials for the particular sustainability product; or (2) where that product does not have pre-contractual materials, Part A of the public-product-level sustainability report relating to that product, as set out under ESG 5.5.1R to ESG 5.5.4R. 5.3.2 R (1) A manager must, where it uses a sustainability label in relation to a sustainability product, include in the pre-contractual disclosure for that product the information in ESG 5.3.3R and ESG 5.3.6R. (2) A manager must, where it does not use a sustainability label in relation to a sustainability product, but uses one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1), include in the pre- contractual disclosure for that (a) the information at ESG 5.3.3R(3)(a) and ESG 5.3.3R(6); and (b) the information set out under ESG 4.3.5R(3)(a) to (c). 5.3.3 R For the purposes of ESG 5.3.2R, a manager must include the following information in the pre-contractual disclosure which relates to a sustainability (1) the sustainability label that the manager is using in relation to the (2) the sustainability product’s sustainability objective, as part of its investment objectives, including details as (a) any material effect (including expected effect), on the financial risk and return of the product as a result of the investment strategy the manager has adopted to pursue the product’s (b) the link between the sustainability product’s sustainability objective and a positive environmental and/or social outcome;

(c) any material negative environmental and/or social outcomes that may arise when pursuing the product’s sustainability objective, as identified under ESG 4.2.9R(1); (3) details of the manager’s investment policy and strategy – in (a) how the manager determines the assets the product invests in, including the criteria it applies in determining the sustainability characteristics of those assets; (b) the standard which the manager relies upon under ESG (i) the basis on which that standard is considered to be appropriate for the purposes of determining the assets the product invests in (in accordance with its sustainability objective); and (ii) the name of either the specific function within the manager’s business or the third party that carried out the (c) the proportion of assets (which may be expressed as an the sustainability product’s sustainability objective, as well as the types of assets that are not invested in accordance with that objective, and the reason(s) for that; (4) where the sustainability product is an index-tracking product, how the index provider’s methodology for index-construction aligns with the product’s sustainability objective; (5) details of the manager’s policies and procedures to monitor the performance of the sustainability product in achieving its sustainability (6) details of the KPIs that the manager will use under ESG 4.2.4R(3) and/or other metrics a retail client may reasonably find useful in understanding the manager’s investment policy and strategy for the (7) details of the manager’s investor stewardship strategy and resources in relation to supporting the achievement of the product’s sustainability (a) where relevant, whether the manager is a signatory of the UK Stewardship Code 2020, published by the Financial Reporting

(b) how the manager will apply its strategy and resources in a manner consistent with achieving the sustainability product’s (8) details of the actions the manager will take in accordance with the requirements of ESG 4.2.9R(6). 5.3.4 G In relation to ESG 5.3.2R(2)(a), a manager may choose to disclose any further information in ESG 5.3.3R that it considers appropriate to include in a pre- 5.3.5 G In relation to ESG 5.3.3R(3)(a), a manager may consider disclosing the (1) the proportion of the product’s assets that have sustainability (2) any screening criteria (either positive or negative) that apply; and (3) the application of any index it uses.
5.3.6 R In addition to the information set out in ESG 5.3.3R, a manager must also include the following information in the pre-contractual disclosure for a (1) where the manager uses the sustainability label ‘sustainability improvers’, it must include the following (a) the timescale identified in ESG 4.2.15R(1) and the short and medium-term targets identified in ESG 4.2.15R(2); and (b) a summary of the types of evidence the manager has relied upon to satisfy itself that the assets in which the product invests have the potential to meet the robust, evidence-based standard set out (2) where the manager uses the sustainability label ‘sustainability impact’, it must include the following (a) the manager’s theory of change, with clear examples that emphasise how the manager expects its investment activities and the product’s assets to contribute to achieving a positive environmental and/or social impact; and (b) a summary of the method used to measure and demonstrate that the manager’s investment activities and the sustainability product’s assets are achieving a positive environmental and/or (3) where the manager uses the sustainability label ‘sustainability mixed goals’, it must include the following

(a) details as to the proportion of the sustainability product’s assets which are invested in accordance with each of the sustainability objectives referred to in ESG 4.2.18R; and (b) in relation to the proportion invested in accordance (i) the requirements for using the sustainability label ‘sustainability improvers’ under ESG 4.2.15R, the information set out under ESG 5.3.6R(1); and (ii) the requirements for using the sustainability label ‘sustainability impact’ under ESG 4.2.17R, the information set out under ESG 5.3.6(R)(2). 5.3.7 R A manager must, in order to meet the requirements of ESG 5.3.3R and ESG 5.3.6R, set out the required information so that it is clearly identifiable in the pre-contractual materials relating to the particular sustainability product (unless that information is otherwise being included in Part A of the relevant public product-level sustainability report for that sustainability product in accordance with ESG 5.5.1R to ESG 5.5.4R). 5.3.8 G In meeting the requirements of ESG 5.3.7R, a manager may, for example, choose to include the required information in a dedicated section of the pre- 5.3.9 R A manager must ensure that the information at either ESG 5.3.2R(2)(b) or ESG 5.3.3R(1) (as applicable), together with the information at ESG 5.3.3R(2), is located in a prominent place in the pre-contractual disclosure for the 5.4 Preparation of sustainability reports 5.4.1 R (1) A manager must prepare the reports in ESG 5.4.1R(2) in accordance (a) is undertaking sustainability in-scope business in relation to a sustainability product that is not a feeder fund; and (b) uses either a sustainability label or one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1) in relation to (a) Part A of a public product-level sustainability report, in circumstances where a sustainability product does not have pre- contractual materials that relate to it; and (b) Part B of a public product-level sustainability report in accordance with ESG 5.5.5R to ESG 5.5.12R. 5.4.2 R A manager that is undertaking sustainability in-scope business in relation to a sustainability product must, subject to ESG 3.1.3R, prepare a sustainability entity report, regardless of whether it uses a sustainability label or one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1) in relation to 5.4.3 R A manager must meet the following requirements in relation to the timing and publication of Part B of a public product-level sustainability report and a (1) A manager must produce and publish Part B of a public product-level sustainability report annually, covering a reporting period of 12 months, and must publish the first report within 12 months after the manager first starts to use a sustainability label or uses one or more of the terms listed in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1) in relation to a (2) A manager must produce and publish a sustainability entity report annually, covering a reporting period of 12 months and, in relation to the (a) where a manager meets the requirements of an enhanced SMCR firm pursuant to SYSC 23 Annex 1 8.2R paragraph 1 in relation to sustainability in-scope business, the first report must be produced and published by 2 December 2025; and (b) where a manager does not meet the requirements of an enhanced SMCR firm pursuant to SYSC 23 Annex 1 8.2R paragraph 1 but has assets under management in relation to sustainability in- scope business of £5bn or more calculated as a 3-year rolling average on annual assessment, the first report must be produced and published by 2 December 2026. (3) A manager may change the reporting dates in ESG 5.4.3R(1) and ESG 5.4.3R(2) for subsequent reports following the first report, but the manager must ensure that there is no period of time which is not covered by Part B of a public product-level sustainability report or a sustainability entity report and must issue an interim report if necessary. (4) A manager must take reasonable steps to publish Part B of a public product-level sustainability report and a sustainability entity report in a way that makes it easy for clients to locate and access, including, at a minimum, by making the most recent edition of those reports available in a prominent place on the main website for the business of the 5.4.4 R A manager must, where it is required to prepare a public TCFD product report, include the contents of that report (or a hyperlink to it) in Part B of a public product-level sustainability report, making clear that the public TCFD product

report forms part of the manager’s overall Part B of a public product-level sustainability report with respect to climate-related disclosures.
5.4.5 R A manager must, where it is required to prepare a TCFD entity report, include the contents of that report (or a hyperlink to it) in its sustainability entity report, making clear that the TCFD entity report forms part of the manager’s overall sustainability entity report with respect to climate-related disclosures. Data considerations when preparing sustainability reports 5.4.6 R A manager must comply with ESG 5.4.7R to ESG 5.4.10R in relation to preparing Part B of a public product-level sustainability report or a 5.4.7 R In satisfying its reporting and disclosure obligations under ESG 5.4 and ESG 5.5, a manager must, insofar as is reasonably practicable, use the most up to 5.4.8 R In preparing Part B of a public product-level sustainability report, a manager must select, from within the 12-month reporting period, the most recent calculation date for which up-to-date information is available. 5.4.9 R A manager must not disclose metrics (1) there are gaps in underlying data or methodological challenges; and (2) these data gaps or methodological challenges cannot be addressed using proxy data or assumptions without the resulting disclosure, in the reasonable opinion of the manager, being misleading. 5.4.10 R A manager must ensure that Part B of a public product-level sustainability report and a sustainability entity report include an adequate explanation (1) any gaps in the underlying data relied upon to make sustainability- (2) how the manager has addressed these gaps, for example, by using proxy data or assumptions and briefly setting out any methodologies used in doing so, providing relevant contextual information and explaining any (3) any metrics that the manager has not been able to disclose, on the basis (4) in respect of ESG 5.4.10R(3): (a) the gaps in underlying data or methodological challenges that have resulted in the manager being unable to make the relevant (b) why the manager has not been able to address those gaps or challenges using proxy data or assumptions; and

(c) what steps the manager will take to address those gaps or 5.4.11 G In addition, a manager may include in Part B of a public product-level sustainability report or its sustainability entity report an explanation of the proportion of assets in which each sustainability product invests for which data are verified, reported, estimated or unavailable. Cross-referencing third-party sustainability-related disclosures 5.4.12 R ESG 5.4.13R to ESG 5.4.15R apply to a manager in relation to preparing Part B of a public product-level sustainability report or a sustainability entity report. 5.4.13 R A manager may include hyperlinks and cross-references to relevant sustainability-related disclosures contained in a third party’s sustainability reporting where such information enables the manager to prepare Part B of a public product-level sustainability report or a sustainability entity report. 5.4.14 R The manager must set out the rationale for relying on any third-party sustainability disclosures, and any deviations between the third party’s approach 5.4.15 R Where relevant, a manager may also draw links and refer to Part B of its public product-level sustainability report from its sustainability entity report and vice 5.5 Sustainability product-level reporting Form and content of Part A of a public product-level sustainability report 5.5.1 R A manager must prepare Part A of a public product-level sustainability report in circumstances where a sustainability product does not have pre-contractual 5.5.2 R A manager must ensure that Part A of a public product-level sustainability (1) contains the information set out in ESG 5.3.3R and ESG 5.3.6R; and (2) is made available to clients before they invest in a sustainability product. 5.5.3 R A manager must publish Part A of a public product-level sustainability report on the relevant digital medium for the business of the manager in a prominent place on the specific webpage or page on a mobile application or other digital medium at which the sustainability product is offered. 5.5.4 R A manager must ensure that it keeps the information set out in Part A of a public product-level sustainability report under review in accordance with ESG Form and content of Part B of a public product-level sustainability report

5.5.5 R (1) ESG 2.3.1R to ESG 2.3.4R apply for the purposes of a manager preparing Part B of a public product-level sustainability report, where the reference to ‘public TCFD product report’ is substituted with the reference to ‘public product-level sustainability report’.
(a) where a manager uses a sustainability label in relation to a sustainability product, include in Part B of its public product- level sustainability report the information set out under ESG (b) where a manager does not use a sustainability label in relation to a sustainability product but uses one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1), include in Part B of its public product-level sustainability report the information (iii) ESG 5.5.6R(8) (in relation to the manager’s investment 5.5.6 R In addition to the requirements at ESG 5.4.4R, a manager must include the following information in relation to a sustainability product in Part B of a public product-level sustainability (1) the sustainability label that the manager is using in relation to the (2) details of the product’s sustainability objective; (4) details as to the product’s progress towards achieving its sustainability (5) details as to how the product invests in accordance with the manager’s investment policy and strategy for that product on an ongoing basis; (6) the proportion of assets (which may be expressed as an approximate sustainability objective, as well as the types of assets that are not invested in accordance with that objective and the reason(s) for that;

(7) details of the sustainability product’s performance against the KPIs (8) details of the relevant metrics (other than those set out in ESG 5.5.6R(7)) that a retail client might reasonably find useful in understanding the product’s sustainability objective and/or the manager’s investment policy and strategy for that (9) details of the following information, where this is relevant to a retail client’s understanding of the metrics set out at ESG 5.5.6R(7) and ESG (a) relevant contextual information such as how the metrics should be interpreted and their associated limitations – for example, if particular assumptions or proxies have been used; and (b) historical annual calculations of the metrics in ESG 5.5.6R(7) and ESG 5.5.6R(8) after the first year of preparing Part B of a public product-level sustainability report in relation to the product that enable clients to compare the product’s sustainability performance year-on-year in a way that is easy to understand and is not misleading; (10) details (if any) of how the manager’s approach in relation to the product deviates materially from the manager’s overarching approach disclosed in the manager’s sustainability entity report; (11) details of how the manager’s investor stewardship strategy has been applied in relation to the sustainability product, including the activities undertaken and the outcomes the manager has achieved or expects to (12) details of the matters escalated (if any) in accordance with the manager’s escalation plan under ESG 4.2.9R(6). 5.5.7 R In addition to the information set out in ESG 5.5.6R, where a manager uses the sustainability label ‘sustainability impact’, it must also include in Part B of a public product-level sustainability report details of the progress that the sustainability product’s assets are making towards achieving a positive environmental and/or social impact, as measured in accordance with the method 5.5.8 G In relation to ESG 5.5.5R(2)(b), a manager may choose to disclose any further information in ESG 5.5.6R that it considers appropriate to include in Part B of a public product-level sustainability report. 5.5.9 G To the extent that a manager discloses the information referred to at ESG

(1) the manager should clearly explain the methodology used in providing each relevant metric and ensure that the metrics calculated under ESG 5.5.6R(7) and ESG 5.5.6R(8) are at least as prominently presented; and (2) the metrics referred to in ESG 5.5.6R(8) may include (for example) KPIs that are not linked specifically to the sustainability objective of the sustainability product, but which may be common metrics within a 5.5.10 G If a manager discloses material deviations under ESG 5.5.6R(10), it may refer to the relevant sections of its sustainability entity report, and similarly its sustainability entity report may refer to these disclosures in Part B of its public product-level sustainability report. 5.5.11 G A manager may, for the purposes of ESG 5.5.6R(11), choose to cross-reference and include a hyperlink in its public product-level sustainability report to a report that it has published for the purposes of demonstrating its compliance with the UK Stewardship Code 2020, published by the Financial Reporting Council; if doing so, it should clearly signpost the information which is relevant to the sustainability product. Reviewing Part B of a public product-level sustainability report 5.5.12 R A manager must ensure that Part B of a public product-level sustainability report remains consistent with the sustainability label that is used in relation to a sustainability product, as well as the disclosures required under ESG 5.2 and ESG 5.3 in relation to that product. On-demand product-level sustainability information 5.5.13 R (1) A manager must prepare and provide on-demand sustainability information to a person who requests it in order to satisfy sustainability- related disclosure obligations, whether under this chapter or as a result of other legal or regulatory (a) within a reasonable period of time; and (b) in a format which the manager, acting reasonably, considers appropriate to meet the information needs of that person. (2) A manager that receives a request for on-demand sustainability information under ESG 5.5.13R(1) must provide the information under ESG 5.4.4, ESG 5.5.1R to ESG 5.5.4 (as applicable) and ESG 5.5.5R to 5.5.14 R (1) On receipt of a request from a person under ESG 5.5.13R(1), a manager must provide on-demand sustainability information as at a calculation date determined in accordance with ESG 5.4.8R or at an alternative calculation date where this has been agreed between the person and the

(2) A manager is not required to comply with a request made under ESG 5.5.13R(1) before 2 December 2025.
5.5.15 R The entitlement in ESG 5.5.13R(1) is limited to one request for on-demand product-level sustainability information in respect of each sustainability product in each of the manager’s 12-month reporting periods under ESG 5.5.16 G A manager is encouraged to consider, where practicable, making available to a person the information under ESG 5.5.13R(2) irrespective of the person’s eligibility to request such information under ESG 5.5.13R(1). 5.6 Sustainability entity report Content of a sustainability entity report 5.6.1 R In addition to the requirements at ESG 5.4.5R, a manager must, in relation to the overall assets it manages within its sustainability in-scope (1) set out the following information relating (a) the manager’s approach to governance, with respect to managing sustainability risks and opportunities; (b) the actual and potential impacts of any material sustainability- related risks and opportunities on the manager’s businesses, strategy and financial planning; (c) how the manager identifies, assesses and manages sustainability- (d) the metrics and targets used by the manager to assess and manage relevant material sustainability-related risks; (2) explain, either in its sustainability entity report or in a cross-referenced public product-level sustainability report, where its approach to a particular investment strategy, asset class or product is materially different to its overall entity-level approach to governance, strategy, risk management or targets and metrics; and (3) where relevant, briefly explain in its sustainability entity report how the manager’s strategy has influenced the decision-making and process by which it delegates functions, selects delegates, and relies on services, strategies or products offered or employed by third parties, including 5.6.2 G The FCA considers the following documents relevant in relation to a manager determining the content of disclosures under ESG 5.6.1R(1):

(1) the IFRS S1 General Requirements for Disclosure of Sustainability- related Financial Information with respect to the manager’s disclosures on sustainability-related risks and opportunities; (2) the Sustainability Accounting Standards Board standards with respect to relevant sector-specific matters; and (3) the Global Reporting Initiative Standards with respect to disclosing the impacts of the manager on the environment and/or society. 5.6.3 G A manager should, in meeting the requirements of ESG 5.6.1R(1): (1) consider disclosing sustainability-related topics that it has prioritised in its governance, strategy and risk management, and the rationale for (2) consider disclosing the impact of the manager on the environment and/or society, having regard to the Global Reporting Initiative (3) refer to part 4, section D of the TCFD Annex, entitled ‘Asset managers’ in determining how to make disclosures required under ESG 5.6.1R(1) with respect to assets managed on behalf of clients. 5.6.4 R Where a manager uses either a sustainability label or one or more of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1) in relation to a sustainability product, it must, to the extent relevant to the particular product, include the following information in a clear and accessible way in a (1) a description of the resources, governance and organisational arrangements the manager has in place, commensurate with the achievement of the product’s sustainability objective and/or the manager’s investment policy and strategy for the product; and (2) a description of the processes in place to ensure that there is a high standard of diligence in the selection of any data or other information used (including when third-party ESG data or ratings providers are used) to inform investment decisions for the sustainability product. Approach to relevant sustainability-related disclosures contained in other reports at 5.6.5 R (1) If a manager is a member of a group, it may rely on disclosures consistent with those of the group or a member of its group when producing its sustainability entity report, but only to the extent that those group disclosures are relevant to the manager and cover the assets the manager manages as part of its sustainability in-scope business. (2) If a manager relies on such group disclosures, it must ensure that its

(a) includes cross-references, including hyperlinks, to any disclosures contained within the group or group member’s report that relate to assets managed by the manager in relation to its sustainability in-scope business on which the manager is relying to meet its disclosure obligations under this section; and (b) sets out the rationale for relying on the disclosure made by its group or a member of its group and why the disclosure is relevant to the assets managed by the manager in relation to its sustainability in-scope business. 5.6.6 R A manager must also ensure that any material deviations between its approach to governance, strategy, risk management or targets and metrics disclosed under ESG 5.6.1R(1) and the disclosures contained within the group report are clearly explained, either in its sustainability entity report or in the report made by its group or a member of its group. 5.6.7 R (1) If a manager or a member of its group produces a document, other than its annual financial report, which includes disclosures relating to sustainability characteristics, the manager may cross-refer to these disclosures in its sustainability entity report where this information is relevant to clients or a person who is an investor in an unauthorised UK AIF managed by a full-scope UK AIFM or a small authorised UK AIFM, including hyperlinks to where the relevant disclosures are available. (2) Where a manager cross-refers to disclosures made by a member of its group in accordance with ESG 5.6.7R(1), it must explain in its sustainability entity report the rationale for relying on the disclosures in the supplementary document and how such disclosures are relevant to the clients or a person who is an investor in an unauthorised AIF which is a UK AIF managed by a full-scope UK AIFM or a small authorised UK AIFM of the manager’s sustainability in-scope business. 5.6.8 R ESG 2.2.7R applies in relation to the preparation of a compliance statement for the purposes of a sustainability entity report as if the reference to a manager’s TCFD entity report has been substituted by the reference to a manager’s sustainability entity report.
1.5 ESG 2.3.5R(3) R For a firm to whom 1.6 ESG 2.3.9R(1)(b) R The first reporting

1.8 ESG 4.3.1R R The rule in column 2

(b) the report of the authorised fund manager in accordance with COLL 4.5.9R (Authorised fund manager’s report); and (c) subject to COLL 4.5.8R(1)(d), its public TCFD product report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website in accordance with ESG 2.3.1R, where the half-yearly long report most closely follows the reporting deadline of 30 June, under (d) where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website in accordance with ESG 5.5.5R, where the half-yearly long report is the report that most closely follows the date on which Part B of the public product-level sustainability report was published. (2) A half-yearly long report on a scheme which is an umbrella, must be prepared for the umbrella as a whole and must (ii) the report of the authorised fund manager in accordance with COLL 4.5.9R; and (iii) subject to COLL 4.5.8R(2)(iv), its public TCFD product report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 2.3.1R, where the half-yearly long report most closely follows the reporting deadline of 30 June, under ESG 2.1.1R(1); (iv) where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 5.5.5R, where the half-yearly long report is the report that most closely follows the date on which Part B of the public product-level sustainability report 6 Operating duties and responsibilities

(2) where a sustainability label is not used in relation to a scheme, but that scheme uses the terms in ESG 4.3.2R(2) under ESG 4.3.2R(1) the information required under ESG 5.3.2R(2). 8.3.5A R (1) An annual report, other than for a scheme which is an umbrella, (d) the report of the auditor in accordance with COLL 4.5.12R (e) subject to COLL 8.3.5AR(1)(d), its public TCFD product report or an adequately contextualised and prominent cross- reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 2.3.1R; and (f) where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance with ESG 5.5.5R. (2) An annual report on a scheme which is an umbrella must be prepared for the umbrella as a whole and must (iii) comparative information in accordance with COLL (iv) subject to COLL 8.3.5AR(2)(v), its public TCFD product report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance (v) where applicable, Part B of its public product-level sustainability report or an adequately contextualised and prominent cross-reference and hyperlink to the report’s location on the firm’s website, in accordance

Amendments made by the Sustainability Labelling and Disclosure of Sustainability- Related Financial Information Instrument 2023

Amendments to the Consumer Credit sourcebook (CONC) In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Financial promotions and communications with customers 3.3 The clear fair and not misleading rule and general requirements Guidance on clear, fair and not misleading 3.3.9A G A firm is reminded of its obligations under ESG 4.3.1R when it communicates or approves a financial promotion that references the sustainability characteristics of a product or service. Amendments to the Investment Funds sourcebook (FUND) In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Requirements for alternative investment fund managers Prior disclosure of information to investors 3.2.2 R An AIFM must, for each UK AIF that it manages, and for each AIF it markets in the UK, make available to AIF investors before they invest, in line with the instrument constituting the fund, the following information and any material changes to 3.2.2A G An AIFM will also need to include the following when making available the information required by FUND 3.2.2R: (1) where a sustainability label is used in relation to a UK AIF, the information set out at ESG 5.3.3R and ESG 5.3.6R, in accordance (2) where a sustainability label is not used in relation to a UK AIF, but the AIF uses any of the terms in ESG 4.3.2R(2) in accordance with ESG 4.3.2R(1), the information required under ESG 5.3.2R(2). 7 FUND 3.2.4AG G A full-scope UK

8 FUND 3.2.2AG(1) G An AIFM of a UK 9 FUND 3.2.2AG(2) G An AIFM of a UK

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