FCA publishes guidance on good and poor practice for SDR sustainability labels
The Financial Conduct Authority (FCA) has published guidance on good and poor practice for using labels under the Sustainability Disclosure Requirements (SDR) regime. The guidance, published on 27 February 2026, provides examples for each of the four sustainability labels: Sustainability Focus, Sustainability Improvers, Sustainability Impact, and Sustainability Mixed Goals. The examples are based on findings from the fund authorisations process for updating pre-contractual disclosures and engagement with industry stakeholders since firms became able to use sustainability labels in July 2024. The guidance is intended to help firms prepare pre-contractual disclosures and references rules in the Environmental, Social and Governance sourcebook (ESG) 4.2 and ESG 5.3, as well as the anti-greenwashing rule and guidance (FG24/3). The FCA noted that applications to update pre-contractual disclosures have improved as firms have become more familiar with the requirements and the number of labels on the market has increased, though it has not always been clear whether firms meet the labelling requirements or whether disclosures accurately reflect fund investments.