Sustainability Disclosure Requirements have long been on the industry’s radar, supported by wider international actions surrounding the need to combat climate change and protect our environment. However, more recently, clarity around what these requirements entail and how we can appropriately implement them has been notable by its absence – leaving many to wonder, what comes next?
The history of SDR
In July 2021, the Chancellor announced the new Sustainability Disclosure Requirements (SDR) at his Mansion House speech. These requirements were to be focused on combining existing requirements with new ones in an effort to create a new sustainable investment labelling regime which would make it easier for consumers to navigate the investment products available to them.
The SDR were then fleshed out three months later in October, when, just before hosting COP26, the Treasury laid out its roadmap to sustainable investing: Greening Finance.
This detailed what the SDR would need to include, and when; how the SDR should report against the (forthcoming) UK Green Taxonomy; considerations to be made in the day-to-day running of business to ensure responsible stewardship; the potential for ESG data and ratings providers to be brought into the scope of the regulator and Government expectations for asset managers, asset owners and service providers as part of the UK’s transition to net-zero.
Details were “subject to further consideration” and in November, the FCA opened a consultation on SDR and investment labelling, inviting views from the industry at large on the pending obligations. Responses came from far and wide in support of the SDR, with suggestions around labelling, how to make the requirements accessible to consumers, and how the SDR could fit in with other standards.
That consultation was closed in January of this year and the next steps for the SDR were lauded to be in the Queen’s Speech in May. However, while the Treasury stated that it “remained committed to implementing sustainability disclosure requirements” and would “proceed with the necessary legislation in due course”, a reluctance to impose any new regulations on businesses at that time meant that the SDR were notable by their absence in the Financial Services Bill.
This decision was met with notable frustration across the financial industry, with some suggesting that the postponement of the SDRs was a missed opportunity for the UK to reaffirm its position as a global environmental leader as well as denying business the much-needed guidance, clarity and confidence in aligning their processes with a 1.5C future.
Now, the FCA has said it will publish a consultation paper on the sustainability disclosure requirements, including sustainable investment labels, in July, but that formal engagement will not be until Q4 this year.
So, with a moving timeline and a distinct lack of clarity around what the SDR is going to look like, where do we go from here?
On 30th June, WA will be hosting a panel discussion to explore where the industry needs to go next. We’ll explore the Government’s latest developments of the regulation, the main concerns facing the industry and what effective SDR really look like.
Andrew Death, Deputy Director, Department for Business, Energy and Industrial Strategy
Andrew Death is a Senior Civil Servant in the Department for Business, Energy and Industrial Strategy. He has been a civil servant for 21 years and is currently Deputy Director for audit and corporate reporting. His responsibilities include delivering changes to the corporate reporting framework to implement Government policy of ESG reporting, as well as delivering legislative change to increase competition, choice and resilience in the audit market.
Louisiana Salge, Senior Sustainability Specialist, EQ Investors
Louisiana is responsible for overseeing EQ’s ESG and impact integration strategy across all assets, its stewardship efforts and sustainability data reporting.
Louisiana first joined EQ Investors in 2018 on an internship during her master’s degree programme at Imperial College London, where she conducted research on impact measurement for her thesis. This formed the groundwork for EQ’s award-winning Positive Impact Report, and she joined the firm as a Sustainability Specialist after graduating. Over the last 2 years, Louisiana has developed, and implemented common sustainability standards across all assets managed at EQ. She also leads as a specialist across the three sustainable portfolios managed at EQ: Positive Impact, Future Leaders, Climate Action.
James Alexander, CEO, UK Sustainable Investment and Finance Association
James Alexander joined UKSIF as Chief Executive in October 2020, with a strong vision and mandate to further enhance the organisation’s key role in promoting and expanding sustainable investment and finance in the UK.
James has a background in international climate finance and infrastructure finance as well as many years’ experience in leadership roles in membership organisations. Most recently, James supported global megacities to overcome the substantial barriers to financing climate action as Director of the City Finance Programme at the C40 Cities Climate Leadership Group and Head of the C40 Cities Finance Facility – a project preparation facility he developed, now supporting cities across the world to structure nearly a billion dollars of sustainable infrastructure transactions. James has worked on international climate finance issues at the UN level and supported cities across the world to invest their pensions and reserves more sustainably.
James is Treasurer of Eurosif, the European Sustainable Investment Forum, a member of the Green Technical Advisory Group (GTAG) providing advice to the UK Government on implementing a UK green taxonomy and a member of the Disclosures and Labels Advisory Group (DLAG) providing advice to the FCA on the UK’s SDR and fund labelling regime.
Thursday 30th June,
08:00 arrival for 08:30 start, close at 10:00
6th Floor, Artillery House,
11-19 Artillery Row,
London, SW1P 1RT