The UK’s Sustainability Disclosure Regulation (SDR) brings many changes to the UK financial market with new naming and marketing rules for sustainability funds in the UK. Deadlines for those rules are approaching quickly. On December 2, over 1,200 UK funds must comply with the new rules. PA Future writes:
“The 2 December deadline concerns the naming and marketing of investment products. From this date, FCA-authorised firms will only be able to use sustainability-related terms in the naming or marketing of a fund if they meet strict guidelines. These cover a range of areas including anti-green washing, the sustainable character of a product (at least 70% of assets under management need to be sustainable) and disclosures about the sustainability of the fund.
Some 1,213 UK funds – covering ETFs, IA unit trusts, Open-Ended Investment Companies (OEICs) and investment trusts – will need to comply with these stringent requirements for SDR, given the sustainability-related terminology in their names. Other funds, including offshore funds, will come into scope at a later date.”
To fulfill disclosure obligations to investors, firms must make changes by early October to reach compliance by December 2. The new requirements are stringent, so it is possible that the UK will see funds change their names to be outside the rule’s scope rather than keep their names and work towards compliance. This would be similar to what happened in the EU where many funds chose to downgrade rather than comply with heightened SFDR requirements. Even if firms choose to rename rather than comply, the new SDR rules will bring a higher degree of confidence to sustainable investing in the UK as lower-quality funds are weeded out.
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