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4 things advisers should be aware of with SDR

SDR Has Arrived!

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  • Sustainability Impact TM
  • Sustainability Mixed Goals TM
  • Sustainability Focus TM
  • Sustainability Improvers TM
  1. It’s here at last!

After a few lengthy delays, the final Policy Statement was released at the end of 2023. The new rules start to come into force throughout this year. Here are some key dates for your calendar in 2024;

  • 31st May 2024 – Introduction of the anti-greenwashing rules.
  • 31st July 2024 – Firms can start using the sustainability labels.
  • 2nd Dec 2024 – Introduction of the naming and marketing rules.
  1. It’s not quite finished yet though.

Guidance for the anti-greenwashing rules is still in consultation until 26th January. When the final rules come into force in May, they will apply to all FCA-authorised firms, including Financial Advisers and Planners, to ensure any sustainability-related claims are fair, clear and not misleading. Advisers will be responsible for ensuring all sustainability terminology on client communications, websites, newsletters etc. can be substantiated. The guidance provides some practical examples.

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  1. Four labels.

Advisers should be aware of the final 4 sustainability fund labels:

  1. Focus
  2. Improvers
  3. Impact
  4. and the new Mixed Goals label

Advisers should understand the unique aims and features of each category (email us at info@worthstone.co.uk if you’d like more information on each category). Advisers should also be aware that there will still be non-labelled funds with some sustainability characteristics, but they will not be allowed to use terms such as ‘sustainable’ or ‘impact’ in their names/ label.

  1. Asset manager engagement is at the heart of SDR.

Active ownership? Stewardship? Engagement? It’s not commonly defined but it is more commonly understood. Worthstone has always assessed asset managers’ efforts to actively support companies to adopt sustainable practices as an integral part of our fund ratings. With SDR, the FCA is placing it centre stage. Advisers should be aware that asset manager stewardship is one of the key criteria across all 4 labels.

We want to help you make sure asset managers are engaging properly with companies they invest in. We are offering a set of suggested questions that you may wish to ask asset managers that you already have a relationship with. To receive the questions click here.