New regulatory powers Sustainability disclosure in financial services Taking forward SDR in the financial services sector
The Greening Finance Roadmap identified the FCA as the main regulator for introducing SDR in the financial services sector. The PRA also requires prudential disclosure in connection with matters relating to sustainability, for example through implementation of any Pillar 3 Disclosure requirements of the Basel Committee on Banking Supervision 7 .
	The FCA has already begun taking SDR forward for relevant authorised firms under its existing objectives and rulemaking powers, which are sufficiently broad for the purpose, with its consultation on SDR and investment labels CP22/20 which builds on its earlier Discussion Paper DP21/4 . The SDR provisions introduced in the Act will not affect these in-flight FCA consultations.
	SDR has strong links to wider climate and environmental policy, and so the government has an important role to play in shaping SDR policy.
	The Act therefore requires the FCA and the PRA to "have regard" to any policy statement on SDR made by HM Treasury when making rules or issuing related guidance on disclosure in connection with matters relating to sustainability.
	The SDR policy statement may be published by HM Treasury in any manner it considers appropriate, and any published statement must be kept under review.
	The Act requires HM Treasury to consult the FCA and the PRA, as relevant, ahead of making any such policy statement, and requires the regulators to prepare a report for HM Treasury on any matters in connection with the policy statement if HM Treasury asks for such a report. Any requests made by HM Treasury must be made in writing, and reports from regulators must be submitted within a reasonable period as is specified or agreed. This supports information gathering for HM Treasury, whilst facilitating effective cooperation between the government and the regulators.
	In addition, the Act requires the FCA and the PRA to report on how they have satisfied the requirement that their relevant rule-making has had regard to the SDR policy statement in their annual reports. This creates an ongoing process of accountability with respect to the SDR policy statement that enhances scrutiny of regulatory action on SDR.