Sustainability Disclosure Requirements (SDR) and Investment Labels
Investing for a better tomorrow
The Financial Conduct Authority (FCA) rules on Sustainability Disclosure Requirements (SDR) were introduced in July 2024 as part of a range of consumer protection measures designed to combat greenwashing and promote greater transparency and consistency across how UK asset managers label and market sustainable investment funds.
The SDR regime introduced four clear sustainability “labels” designed to provide investors with the information they need to make educated decisions as to which funds best align with their needs and sustainability appetite. These labels are:
| Sustainability Focus | These funds invest in assets that are environmentally or socially sustainable, determined by a robust, evidence-based standard of sustainability |
| Sustainability Improvers | These funds invest in assets that have the potential to become more sustainable over time, determined by their potential to meet a robust, evidence-based standard |
| Sustainability Impact | These funds seek to achieve a predefined, positive, measurable environmental and/or social impact |
| Sustainability Mixed Goals | These funds invest in assets that meet or have the potential to meet a robust, evidence-based standard for sustainability and/or invest with an aim to achieve positive impact |
Investing for a better tomorrow
At EdenTree, we believe the SDR regime has brought much-needed clarity to the market, setting a higher bar for sustainability that is essential to the future growth of the sustainable fund industry.
That’s why all of our funds carry an SDR Sustainability label, with eight funds sitting in the Sustainability Focus category, and three carrying a Sustainability Impact label, as below:
| SDR label | Fund name |
|---|---|
| Sustainability Focus | EdenTree Sustainable European Equity |
| EdenTree Sustainable Global Equity | |
| EdenTree Sustainable Managed Income | |
| EdenTree Sustainable Short Dated Bond | |
| EdenTree Sustainable Sterling Bond | |
| EdenTree Sustainable UK Equity | |
| EdenTree Sustainable UK Equity Opportunities | |
| EdenTree Global Sustainable Government Bond | |
| Sustainability Impact | EdenTree Global Impact Bond |
| EdenTree Green Impact Equity | |
| EdenTree Green Impact Infrastructure |
Investing for a better tomorrow
Across our range of funds, we only invest in companies we believe are creating value. Companies that we deem to be damaging value are excluded from our investment universe. This enables us to build portfolios that are not only sound long-term investment propositions, but which also generate positive outcomes for people and the planet.
The EdenTree Standard is our framework for assessing how sustainable a company is. At its core is the concept that sustainability is synonymous with value-creation for people and planet. Unsustainable companies are those that damage value for people, planet and investors through operations, products and services that harm stakeholders.
The EdenTree Standard applies across our entire fund range, meaning every company we hold is considered to be sustainable as a result of the value it creates. Recognising that company performance exists on a spectrum, the Standard utilises a tiered rating system: the higher the rating, the more value a company is deemed to be creating.
Find out more about the EdenTree Standard.
Frequently asked questions (FAQs)
Which EdenTree funds carry an SDR label?
All our funds carry an SDR Sustainability label, underscoring our long-standing commitment to sustainable and impact investment.
Eight funds sitting in the Sustainability Focus category, and three carry a Sustainability Impact label, as below:
| SDR label | Fund name |
|---|---|
| Sustainability Focus | EdenTree Sustainable European Equity |
| EdenTree Sustainable Global Equity | |
| EdenTree Sustainable Managed Income | |
| EdenTree Sustainable Short Dated Bond | |
| EdenTree Sustainable Sterling Bond | |
| EdenTree Sustainable UK Equity | |
| EdenTree Sustainable UK Equity Opportunities | |
| EdenTree Global Sustainable Government Bond | |
| Sustainability Impact | EdenTree Global Impact Bond |
| EdenTree Green Impact Equity | |
| EdenTree Green Impact Infrastructure |
What does it mean if a fund has an SDR label?
The four Sustainability labels were designed to provide investors with the information they need to make educated decisions as to which funds best align with their needs and sustainability appetite.
A fund may only use the sustainability-related terms in its name if it has adopted an SDR label, and may only adopt a label if it complies with five general criteria, as well as the specific criteria required for that particular label. The general criteria are:
- Sustainability objectives – every labelled fund must have a sustainability objective (to improve or pursue positive environmental and/or social outcomes) as part of its investment objective
- Investment policy and strategy – Ordinarily, at least 70% of a labelled fund’s assets must be invested in accordance with its sustainability objective, with reference to a robust, evidence-based standard that is an absolute measure of environmental and/or social sustainability
- Key performance indicators (KPIs) – funds/ managers must identify KPIs to measure the progress of a labelled fund or its investments against the sustainability objective
- Resources and governance – funds/ managers are responsible for appropriate resources, governance and organisational arrangements to support delivery of the sustainability objective
- Stewardship – funds / managers must disclose their stewardship strategy to support the delivery of the sustainability objective.
What are the Naming and Marketing Rules?
Under the SDR regime, sustainability-related terms may only be used in product names and marketing if:
- they use a label and follow an appropriate naming convention – e.g. provided that, where the ‘sustainability focus’, ‘sustainability improvers’ or ‘sustainability mixed goals’ labels are used, the word ‘impact’ is not used in the product’s name, or
- they do not use a label but comply with the ‘Product name’ and ‘Marketing’ sections below.
Product name
- The product must have sustainability characteristics and the product’s name must accurately reflect those characteristics, but the terms ‘sustainable’, ‘sustainability’, ‘impact’ and any variation of those terms must not be used
- Firms must produce the same types of disclosures as required for a labelled product
- Firms must also produce and prominently publish a statement to clarify that the product does not have a label and the reasons why
Marketing
- Firms must produce the same disclosures and statement as those required when sustainability-related terms are used in the name of a product
What are the disclosure and reporting requirements?
All funds with a SDR Sustainability label, and any non-labelled funds with Sustainable characteristics must produce:
- Fund prospectus and KIID – this pre-contractual document must detail the fund’s sustainability objective and policy, explaining how the fund will achieve this and its sustainability outcomes
- Two-page SDR consumer-facing document - this consumer-friendly version of the fund prospectus which looks to make the information it contains consistent, accessible and easier for a consumer to understand key sustainability, environmental, social and governance features of the fund
- An annual product-level sustainability report – Each report should cover a reporting period of 12 months, with the first report produced within 12 months from the date of fund adopting a sustainability label
What is the Anti-Greenwashing rule?
The anti-greenwashing rule applies to all UK FCA-authorised firms who make sustainability-related claims about their products and services.
All firms must ensure that any communications made about the sustainability-related characteristics of their products and services are:
- consistent with the sustainability characteristics of their financial product or service; and
- fair, clear and not misleading
Any references to sustainability must be:
- Correct and capable of being substantiated
- Clear and presented in a way that can be understood
- Complete – they should not omit or hide important information and should consider the full life cycle of the product or service
- Fair and meaningful in relation to any comparisons to other products and services
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