The obligation

The rule itself

ESG 4.3.1R(2) is short: “A firm must ensure that any reference to the sustainability characteristics of a product or service is: (a) consistent with the sustainability characteristics of the product or service; and (b) fair, clear and not misleading.”FCA Handbook ESG 4.3.1R(2)

It binds “all firms” — ESG 3.1.2R(1) states plainly that “ESG 4.1.1R(1) and ESG 4.3.1R apply to all firms”FCA Handbook ESG 3.1.2R(1), not only managers who run labelled funds.

A bank marketing a green mortgage, an insurer describing a policy's sustainability credentials, and a pension provider's default fund literature are all in scope on the same terms as an asset manager's fund factsheet.

The rule applies where a firm communicates with a client in the United Kingdom, or communicates or approves a financial promotion for a person in the United Kingdom, subject to carve-outs for excluded communications and third-party prospectusesFCA Handbook ESG 4.3.1R(1).

Both gates are UK gates — it is not a rule about sustainability communications everywhere.

Two dates, not one

When the rule exists, and when it applies

The rule was made on 28 November 2023, but ESG TP 1.8R fixes a later date for when it starts to bind: it “applies from 31 May 2024”FCA Handbook ESG TP 1.8R.

The gap between a provision being made and a provision applying is easy to collapse into a single date; here it is seven months.

Read the limits, not just the rule

Four things the rule does not cover

The commonest misreading of ESG 4.3.1R is treating it as a general duty to be honest about sustainability.

It is narrower, on its own terms:

  • Excluded communications and third-party prospectuses are carved out on the face of the rule itself (ESG 4.3.1R(1)(b)(i)–(ii))
  • Claims a firm makes about itself, as opposed to about a product or service, are not caught — those fall instead under the FCA’s Principles 6 and 7, the Consumer Duty, and the CMA and ASA green-claims guidance
  • Communications outside the two UK gates — a UK client, or a UK recipient of a financial promotion
  • Unauthorised firms: the rule applies to products and services that FCA-authorised firms make available to UK clients

The second limit is the one most often missed.

A firm-level net-zero pledge is not caught by ESG 4.3.1R at all — the rule's scope, in the FCA's own words, “relates to products and services” FCA FG24/3.

A separate chain of law and guidance covers what a firm says about itself as a firm.

A different rule, same chapter

The naming and marketing rules: thirteen restricted terms

Sitting alongside the anti-greenwashing rule, in the same ESG 4.3 chapter, is a second, narrower rule aimed specifically at retail fund names and financial promotions.

ESG 4.3.2R(2) restricts thirteen terms: “ESG”, “environment”, “environmental” or “environmentally”, “social” or “socially”, “climate”, “sustainable” or “sustainability”, “green”, “transition”, “net zero”, “impact”, “responsible”, “sustainable development goals” or “SDG(s)”, and “Paris-aligned” — plus an open-ended thirteenth limb catching any other term implying sustainability characteristicsFCA Handbook ESG 4.3.2R(2).

It is triggered where a manager undertakes sustainability in-scope business for retail clients and uses those terms in a product name or a financial promotionFCA Handbook ESG 4.3.2R(1), subject to carve-outs for short factual statements and uses not intended to describe sustainability characteristics — the FCA's own examples are “financial impact” or “economic climate” FCA Handbook ESG 4.3.3G.

Only three of the thirteen are reserved for labelled funds: “sustainable”, “sustainability” and “impact”.

An unlabelled fund may still use the other ten, provided its name accurately reflects genuine sustainability characteristics, it produces the required consumer-facing and pre-contractual disclosures, and it publishes the FCA's prescribed statement that “This product does not have a UK sustainable investment label” FCA Handbook ESG 4.3.5R.

The naming rules take effect, for a given manager, on the earlier of first using a label or 2 December 2024 — a longstop, not a start dateFCA Handbook ESG TP 1.9R.

From 1 January 2026, the FRC's revised UK Stewardship Code brought “sustainable” into its own definition of stewardship; the FCA and FRC do not consider this conflicts with the SDR naming rules, because those rules apply only where a sustainability term describes the characteristics of a specific sustainability product, not stewardship activity generallyFCA Handbook ESG 4.3.

Beyond fund managers

Portfolio managers, and everyone else with FCA authorisation

The labelling regime and the naming rules described above, and the product-level tests on the FCA SDR investment labelspage, have not been extended to portfolio management — a 2024 proposal to do so, CP24/8, was not finalised, and in February 2025 the FCA said it was not the right time to revisit itFCA CP24/8.

The anti-greenwashing rule is different in kind: because it binds “all firms” rather than only managers using a label or a restricted term, it already applies in full to portfolio managers, and to every other FCA-authorised firm, regardless of whether SDR's product-specific rules ever reach themFCA Handbook ESG 3.1.2R(1).