UK-SDR Sustainability Disclosure Regime

• Asset managers - The rules will apply to UK Undertaking for Collective Investment in Transferable Securities (UCITS) management companies, Alternative Investment Fund Managers (AIFM), and any asset managers with over £5 billion in assets under management. This will capture most mid-sized and large asset management firms.
• Insurance companies - Life insurers and some non-life insurers writing investment, pension, or life products will need to comply. Applies to firms with over £5 billion in assets under management.
• Pension providers - Occupational pension providers, personal pension firms, and stakeholder pension schemes with over £5 billion in assets under management.

• Investment advisors - Firms providing investment advice services with over £5 billion in assets under advice.
• Mortgage lenders and brokers - Residential and buy-to-let mortgage providers and brokers will need to make certain disclosures on ESG considerations in lending.
• Distributors - Investment platforms, brokers, and other distributors will need to ensure sustainability-related disclosures are appropriately passed on to end clients.
• Smaller firms are exempt but may need to provide information to larger firms they work with. The FCA encourages voluntary participation.

Overall, the rules will fundamentally impact how sustainability factors are integrated and communicated across the UK's investment value chain. Firm-level planning for compliance should now commence.

• Review portfolios, products, and advice processes to identify where and how ESG factors are currently integrated.
• Update policies and procedures to ensure sustainability risks, adverse impacts, and remuneration incentives can be appropriately disclosed.
• Assess marketing materials, fund documentation, and client communications to determine where enhanced sustainability-related disclosures will be required.
• For products marketed as ESG or sustainable, critically evaluate investment strategies and confirm they align with characteristics being promoted.
• Develop required disclosures, ensuring they are clear, accurate, not misleading, and contain the right level of detail. Seek legal/compliance input.
• Evaluate whether new or improved IT systems, data, and processes are required to capture, analyse and report on ESG factors.

• Update client take-on processes to ensure correct sustainability preferences are captured.
• Train client facing staff, advisers and fund managers on the new requirements.
• Plan for phased implementation, starting with the most impactful disclosures first. Seek regulator feedback where unsure.
• Closely monitor FCA updates for any modifications before final rules are issued.
• Ensure strong oversight of implementation via board/senior management.

• Total energy consumption from various sources such as  electricity, gas, and fuel.
• Greenhouse gas (GHG) emissions associated with energy use, calculated in tonnes of CO₂ equivalent.

• Intensity ratio, which measures GHG emissions per unit of turnover or output.
• Description of energy efficiency measures taken during the year.