Just 80 funds, representing £34.5bn (€41.3bn) of assets, have publicly announced that they plan to use a label under the UK’s regime for sustainable funds as of the end of March, according to Morningstar.
In contrast, 325 funds, accounting for £280bn in assets, have not adopted a label, but have provided their first consumer-facing disclosures, according to Morningstar’s latest report – UK SDR Labelled and Non-Labelled Fund Landscape.
Today is the deadline for managers of UK-domiciled funds with sustainability characteristics to comply with the UK’s Financial Conduct Authority (FCA) Sustainability Disclosure Requirements’ (SDR) naming and marketing rules.
According to the report, Schroders takes the top spot on the labelled fund provider table, while BlackRock is by far the largest provider of non-labelled funds, with 66 products totalling £150bn of assets.
The most adopted label has been ‘Sustainability Focus’, which represents 56% of all labelled funds, followed by ‘Sustainability Impact’ (26%), ‘Sustainability Improvers’ (13%), and ‘Sustainability Mixed Goals’ (5%).
Commenting on the figures, Hortense Bioy, head of sustainable investing research at Morningstar Sustainalytics, said: “The 2 April deadline for the SDR naming and marketing rules has passed, and the picture of the UK labelled and non-labelled fund landscape has yet to be complete.”
She added: “It’s been a long process, but the result should help sustainability-conscious investors better understand what they are investing in. As the landscape of UK funds with sustainability characteristics continues to evolve in the coming months, investors will need to understand how SDR has affected their portfolios.”
In November 2023, after two years of consultation, the FCA published the Sustainability Disclosure Requirements and investment labels Policy Statement, detailing the rules that would apply to sustainable funds domiciled in the UK.
The anti-greenwashing rule came into force on 31 May 2024, while asset managers were permitted to use the labels from 31 July 2024.
Compliance with the naming and marketing rules was originally due by 2 December 2024, but temporary flexibility was granted until 2 April 2025.
Since 2 April, however, all UK funds that make sustainability claims, whether the funds are labelled or not, are required to provide consumer-facing disclosures.
Last year, Morningstar predicted that SDR take-up among sustainable funds would be low, as asset managers realised that criteria to get an SDR label are more stringent than expected, and demand was not as high as had been expected.
Read the digital edition of IPE’s latest magazine
No comments yet