Overview

From 2 December 2026, the FCA's Sustainability Disclosure Requirements (SDR) sustainability entity-reporting rules extend to a wider cohort of in-scope UK asset managers above the £5 billion AUM threshold. This is set out in ESG 5.6 of the FCA Handbook and sits alongside and deliberately uses the structure of the entity-level reporting framework required under the Task Force on Climate-related Financial Disclosures (TCFD), set out in ESG 2.2.

The sustainability entity report uses the same four TCFD pillars (governance, strategy, risk management, and metrics and targets), but broadens the focus beyond climate to wider sustainability-related risks and opportunities (e.g. biodiversity and human rights).

For most managers, this should not require a wholly new reporting process. The main additions are identifying material sustainability topics beyond climate, gathering evidence to support disclosures, and ensuring consistency across the entity report, product disclosures, websites and marketing materials.

This note covers what’s involved in completing a sustainability entity report, and how it builds on TCFD.

What is the sustainability entity report and who’s in scope?

The SDR are not a single reporting requirement but a package of rules covering sustainability-related products, disclosures and marketing.

For asset managers, the most relevant elements of SDR are shown in the table below. This note focuses primarily on the sustainability entity report.

Requirement	What it does	Who it applies to	Key dates
Anti-greenwashing rule	Requires sustainability claims about financial products and services to be fair, clear and not misleading.	FCA-authorised firms communicating sustainability characteristics of products or services	In force from 31 May 2024.
Product disclosures	Provide investors with information about products using sustainability labels or sustainability-related terminology.	In-scope retail products using an FCA sustainability label or sustainbility-related terms.	Already in force and ongoing.
Sustainability entity report	Explains how the manager identifies and manages material sustainability-related risks and opportunities across its business.	In-scope UK asset managers above the applicable £5 billion AUM threshold, calculated using the relevant three-year rolling average.	2 December 2025 for the first cohort and 2 December 2026 for the wider cohort above £5 billion AUM. Note that the Sustainability Entity Level Report is required even if the manager has not adopted SDR product labels.

What’s new compared with TCFD?

The sustainability entity report sits alongside existing TCFD reporting rather than replacing it and much of the existing reporting can be reused. Managers with an existing TCFD report should therefore use that as their starting point.

The main difference is that SDR broadens the focus beyond climate. Managers may need to consider other sustainability topics that are material to the business, such as biodiversity, human rights, labour practices and governance issues. The FCA points firms to the SASB Standards, IFRS S1, and GRI as a useful reference for identifying financially material topics.

The FCA also encourages managers to consider their impacts on people and the environment, having regard to the GRI Standards. This introduces an impact perspective alongside the assessment of sustainability-related risks and opportunities, but it does not create a blanket requirement to undertake a formal double-materiality assessment. The FCA frames this as something managers “should consider”, rather than a mandatory “must” requirement.

Finally FCA guidance recommends using IFRS S1 to inform the content of the sustainability entity report. It is not currently a requirement to report fully against IFRS S1, but it can help firms align their approach with the emerging ISSB-based reporting framework.

The table below highlights the areas that are most likely to require additional work.

Area	TCFD	SDR
Governance	Climate-related oversight and accountability.	Same approach, extended to wider sustainability topics.
Strategy	Climate risks, opportunities, and impacts.	Wider sustainability-related risks, opportunities, and impacts.
Risk management	Climate risk processes.	Sustainability risk processes more broadly, i.e. reflecting wider range of sustainability topics identified beyond climate. Managers are encouraged but not obliged to consider impacts on people and the environment (in addition to impacts on financial performance).
Metrics and targets	Climate metrics and targets.	Metrics and targets for wider sustainability topics where material.
Products and strategies	Limited focus on product differences.	Explain any material differences in how the firm’s sustainability approach applies across products, strategies or asset classes, such as different research, stewardship or exclusion processes.
Delegation	Climate considerations where relevant.	Explain how sustainability considerations influence delegation and reliance on third parties.
Labelled products	No equivalent.	Additional disclosures may apply for labelled or sustainability-termed products.

Where to start?

For most firms, the easiest approach is to build from the existing TCFD reporting process rather than create a new one. The following steps set out the approach.

Confirm scope: identify the reporting entity, sustainability in-scope business, AUM and reporting deadline.
Map product obligation: identify labels, sustainability-related terms and product disclosure requirements.
Reuse TCFD: map the latest TCFD report against ESG 5.6 requirements.
Agree material topics: Identify material sustainability risks and opportunities using the SASB Standards, IFRS S1 guidance, and GRI Standards and document the rationale.
Build the evidence base: record sources, methodologies, controls and limitations for each disclosure.
Draft and reconcile: draft the report, explain any material differences across products, strategies or asset classes, and check consistency with product disclosures and marketing.
Challenge and sign off: involve compliance and the accountable senior manager early.