2 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 distributesustainability products and recognised schemes, including ETFs that are recognised schemes, to retail clients.
2 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.
1The TCFD-related2 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’sTCFD in-scope business.
2The 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’sretail 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’ssustainability in-scope business.
1The FCA recognises that at least for a transitional period there may be data and methodological challenges. Nevertheless, we expect firms to provide sufficient information to clients and consumers. Firms should still disclose metrics and quantitative scenario analysis or examples in accordance with the rules in this sourcebook where such disclosure would remain fair, clear and not misleading. Firms should also appropriately explain any limitations on their ability to disclose and the steps being taken to address those limitations.