Four investment trusts have become the first to adopt sustainability labels under the Financial Conduct Authority’s Sustainability Disclosure Requirements (SDR).
Greencoat UK Wind has claimed the Sustainability Focus label, which describes funds with at least 70% invested in assets that are socially and/or environmentally sustainable.
The other three trusts – Schroder BSC Social Impact Trust, Impax Environmental Markets and VH Global Energy Infrastructure – have all adopted the Sustainability Impact label. This label is for trusts with more than 70% invested with the aim of achieving a pre-defined environmental and/or social impact. Crucially, that impact must be measurable so that it can be proven.
Nick Britton, research director at the Association of Investment Companies (AIC), said: “Before any investment trusts can display a label, they must update and approve all of their ESG information published on our website. Investors can be confident that this information is accurate and up to date.
“At the moment, non-UK investment companies, such as Guernsey and Jersey companies, are outside the scope of the labelling regime. We know some of our non-UK members are looking carefully at the labelling regime with a view to meeting equivalent standards and potentially applying for labels once they are brought into scope.”
‘A natural extension of the fund strategy’
Stephen Lilley, investment manager of Greencoat UK Wind, said they decided to adopt a label to reflect what the company’s investment objective is and has been since inception.
“The company is aligned to a sustainability objective of generating renewable electricity through investing in operating UK wind farms, thereby contributing to climate change mitigation through the avoidance of carbon emissions.”
Likewise, Eleanor Fraser-Smith, head of sustainability at Victory Hill Capital Partners and the manager of VH Global Energy Infrastructure, said: “The investments in sustainable energy infrastructure seek to make an impact by supporting the attainment of key sustainable development goals, where energy and energy infrastructure investments are a direct contributor to the acceleration of the energy transition. Adopting a label was therefore a natural extension of the fund strategy. “
