Sustainability Disclosure Requirements (SDR)

The Financial Conduct Authority have found that consumers experience difficulty in understanding the sustainability goals of investment funds.

To combat this, the FCA have introduced additional requirements on asset managers, requiring them to make it clear when a product is making a claim that it includes sustainability goals. You can find more information on their website.

You’ll start seeing labels on investment fund literature (Fund Factsheets and Key Investor Information Documents) for funds that have a specific environmental or social goal.

The label means you’ll have access to clear and simple information on what that goal is and the approach to achieving it (full definition of the labels on the FCA webpage above).

From 31 July 2024 Asset managers can commence utilising the investment labels and customer facing disclosures to make clear to consumers how their product seeks to achieve positive sustainability outcomes.

From 2 December 2024 Asset managers who are using sustainability related terms in the naming or marketing of their products without a label must provide sustainability information  explaining how it’s invested and why it doesn’t have a label.

Source: FCA

There are a couple of things to consider:

1. Some funds will not have a label but may still make sustainability claims, such as including ‘green’ or ‘low carbon’ in the name of the fund. This could be because the Asset manager has either decided not to have a label or does not meet the full FCA criteria to have a label.
2. Any overseas funds are not currently included in the regulations and will not require any labels or disclosures regarding sustainability.

If you have any questions regarding investment labels, please contact your adviser, or visit the FCA’s website.

We’re unable to provide advice on which investments to choose for your pension, and the above information doesn’t serve as a substitute for advice.

If you’re uncertain about investing, you should seek advice from a regulated adviser. If you’d like to choose an adviser but don’t know where to start, MoneyHelper, a government backed financial guidance provider, have made it easy.

Simply go to their website then select the ‘Financial Advice’ section.

You can also review other pension and investment related information on the MoneyHelper website.
 

If you have an adviser appointed, we’d expect your adviser to provide you with the relevant sustainability disclosures and documentation (where applicable) during their investment recommendation process.  
 

If you want to understand more about the sustainability aspects of any fund, please speak to your adviser in the first instance.