Advisers Must Quote Green SDR Investment Labels

The Financial Conduct Authority (FCA) has proposed that both financial advisers and investment platforms must use and disclose to investing clients the new Sustainability Disclosure Requirements (SDR) labels alongside funds managers, pensions, and investment companies.

The new SDR labels are:

• Sustainability Focus:  Funds investing in assets that are environmentally friendly and/or socially responsible.
• Sustainability Improvers:  Funds investing in assets we think have the potential to improve their environmental and/or social sustainability over time.
• Sustainability Impact:  Funds that aim to achieve a positive, measurable impact in relation to an environmental and/or social outcome.
• Sustainability Mixed Goals:  Funds investing in a combination of the other labels.

The labels aim to give consumers confidence that:

• the product has specific a sustainability objective as part of its investment objectives; and
• the firm is committed to high standards (the qualifying criteria) to deliver on the sustainability objective.

New SDR labels will start to be seen from 31 July 2024.

Comment

It is good that new labels are coming to help investors and advisers focus on the environmentally friendly, socially responsible and sustainable targets of a fund.  That said, we cannot see these adding to much value at this stage.