How are providers dealing with the SDR rules?

The terminology used in the promotion of investment funds that aspire to invest in a way that has a positive, or at least not a negative, impact on society has evolved over the decades, but has always had an element of subjectivity.

The first wave of attempts to put a structure around the terminology came with the introduction, within the EU, of the sustainable fund disclosure regulation (SFDR), which awarded funds a number based on their capacity to meet set criteria around sustainability.

Now UK policymakers have revealed their own suite of regulations aimed at adding clarity, with the sustainability disclosure requirements (SDR) rules, which asset management businesses will have to begin implementing from this summer.

Eleanor Fraser-Smith, head of sustainability at Victory Hill Capital Partners, says: “There has been a proliferation of disclosure regulations in recent years which has led to more transparency. However, many of these disclosures are complex and technical, not very accessible and, if they are read, have done little to build trust in the sector.

"ESG teams, comms teams, PR teams, IR teams often don’t align on ESG communications. Additionally, in a world of miscommunication and social media, firms cannot control the narrative and transparency commitments can backfire. That’s why regulations that focus on fair, clear and not misleading communications are vital.”

She adds that her firm is currently examining which of the labels may be most relevant to their fund range. 

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