A cross-industry trade body group, including the Investment Association (IA) and the UK Sustainable Investment and Finance Association (UKSIF), has launched guidance to help retail investors report their consumer-facing disclosures – a key component of the UK’s Sustainability Disclosure Requirement (SDR).
Although the guidance and frameworks are not mandatory, investors are encouraged to produce a consumer-facing disclosure that is “clear, concise and easily read and understood” by retail clients. This should include information such as which SDR labels their products use, or a relevant descriptor or statement clarifying the product does not have a label and why.
Investors are also encouraged to provide an outline of their product’s sustainability objective and sustainability approach, covering the investment policy and strategy as well as the key sustainability characteristics of the assets in which the product will and will not invest. A fund’s sustainability metrics, including the product’s progress toward achieving its sustainability objective, should also be reported.
Meanwhile, for the ‘Sustainability Mixed Goals’ label only, investors should publish the proportion of assets invested under each of the other relevant labels.
The guidance also noted Consumer Duty requirements must be applied to the consumer-facing disclosures and firms should be “testing, monitoring and adapting communications, where appropriate, to support understanding and good outcomes”.
Launching the guidance, a group statement said: “We support the FCA’s provision to ensure consumers can access clear and consistent information on the sustainability characteristics of financial products.
“In line with FCA recommendations, our cross-trade body industry group has come together to develop a proposed framework and associated guidance for firms adding consumer-facing disclosures to their sustainable investment products. We have suggested guidance and frameworks to cover both products with an SDR label and those unlabelled products using sustainability-related terms in naming and/or marketing.
“While the guidance and frameworks are not mandatory, they aim to encourage more consistent disclosure between firms, improve product comparability for retail investors and, in turn, allow consumers to make more informed choices when it comes to sustainable investment.”
