Financial advisers must understand how the FCA’s Sustainable Disclosures Requirements (SDR) impact their business, Hymans Robertson Investment Services (HRIS) chief investment officer William Marshall has said.
This is especially true as the anti-greenwashing regulations and the SDR’s naming and marketing rules for investment products are now in place, he added.
Marshall said advisers need to consider three issues when assessing whether or not to implement the FCA’s SDR rules – how does SDR:
- fit within their advice process;
- align to previous client discussions; and
- relate to any previous verbal or written communications, including their websites and client brochures.
Marshall said: “SDR has the potential to impact all advisers. It considerably strengthens existing regulations affecting what advisers and investment managers are allowed to claim on sustainable investments.
“Unpacking how these regulations affect each adviser firm and their advice on sustainable investments will take time, but given the regulations are now in place, it should be treated as a key priority.”
“With more responsible investment-related regulation likely in the future, firms should lean on the industry frameworks that already exist. For example, the FCA’s anti-greenwashing guidance states any sustainability references need to be: Correct, Clear and Complete, and any Comparisons must be fair and meaningful.
“Firms should also recognise that sustainable investment is a well-trodden path, which means there are numerous examples of good and bad that can be used as a resource. Firms may, for example, look to those in the institutional investment arena who have been investing sustainably for many years. Taking advantage of their learnings can only be a good thing.”
Marshall made these comments as EdenTree Investment Management announced that the EdenTree Global Impact Bond Fund will adopt the SDR “Sustainability Impact” label from 3rd February 2025.
The portfolio will be the third fund in EdenTree’s range to adopt a label, joining the EdenTree Green Future and EdenTree Green Infrastructure funds in the Sustainability Impact category.
The main aim behind the SDR is to “improve the trust and transparency of sustainable investment products and minimise greenwashing”.
Greenwashing is define as the act of “making people believe that your company is doing more to protect the environment than it really is”.
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