ESG Accord highlights SDR labelling discrepancy between labels being applied by fund managers and what financial advisers are excepting to use with their client.
In its latest newsletter, the sustainability organisation is calling on advisers and paraplanners to get in touch with their views.
The temporary flexibility in the naming and marketing rules ends on 2 April. This flexibility applied to funds that needed to make a name change or were in the pipeline to apply a label. The temporary flexibility gave the funds extended time from the December 2024 deadline.
ESG Accord says that following April 2nd information from the FCA shows that there are over 100 funds to be labelled, some still undisclosed.
“We know from various sources, including SRI Services’ Fund EcoMarket that we are expecting something in the region of: 60 Sustainability Focus labels, 27 Sustainability Impact labels, 13 Sustainability Improvers, 3 Sustainability Mixed Goals labels, 156 Sustainability characteristics (non-label), 400 Not eligible (overseas etc),” says Elly Dowding, co-founder of ESH Accord.
But what labels do advisers expect to see? she asks. “According to the February 2025 Investment Association and The Wisdom Council survey (survey of UK retail investors with an interest in sustainable investing and financial advisers with clients invested in sustainable funds), the distribution of labels will sharply contrast with adviser expectations,” she says.
Amongst advisers expecting to use labels:
Sustainability Mixed Goals (35%) was expected to be used the most.
Sustainability Impact (29%) followed as the second most preferred category.
Sustainability Focus (16%) was expected to be used the least by advisers.
Dowding says: “Can we do anything about this disparity to help the advice community in delivering positive client outcomes? This brings us to the role of market participation – advisers are key here! We are big fans of market participation at ESG Accord and the Accord Initiative and we believe that a lot can be done by raising awareness of what advisers need and relaying this type of info to the regulator, fund managers and DFMs. This is Consumer Duty and PROD in action.
“So, here is a call out: if you have any comments on the sustainability landscape, your role within the landscape, what your clients need etc, please let us know. We welcome your comments.”
Main image: paul-bergmeir-FzFH41IucIY-unsplas
