Our rules mean you'll get better information on investments to help you find funds that meet your sustainability objectives.
If you've invested in, or are considering, funds that are described as sustainable, we've introduced several measures to give you better information on what you're investing in.
What this means for you
- In July 2024, we introduced requirements for sustainability labels on funds.
- Since then, firms have started adding labels to certain investment funds that have an environmental or social goal.
- The label means you'll have access to clear and simple information on what that goal is and the approach to achieving it. You'll also get annual updates on progress towards it.
- If a fund doesn’t include a label, but is making sustainability claims, you'll have access to clear and simple information explaining how it's invested and why it doesn't have a label.
Investment labels
There are 4 labels to help you recognise investment funds with different sustainability goals.
Providers can choose to use any of these labels if their funds meet the criteria, but they can also choose not to. We don't approve the use of labels, but we do oversee and monitor the regime. We do so to maintain trust and transparency in these products.
The labels are:
Sustainability Focus
These funds invest mainly in assets that focus on sustainability for people or the planet. Examples include investing in companies providing healthcare products or services, or that use water, energy or materials efficiently.
Sustainability Improvers
These funds invest mainly in assets that may not be sustainable now, but aim to improve their sustainability. Examples may include investments in companies that are on a credible path to reducing carbon emissions, or are committed to improving social standards such as human rights.
Sustainability Impact
These funds invest mainly in solutions to sustainability problems with an aim to achieve a positive impact for people or the planet. Examples may include increasing renewable energy generation and social housing.
Sustainability Mixed Goals
These funds invest mainly in a mix of assets that either focus on sustainability, aim to improve their sustainability over time, or aim to achieve a positive impact for people or the planet. Examples may include a mixture of investments from the labels above.
Investment funds that don't have labels
Some funds may not include a label but may still make sustainability claims, such as including 'green' or 'low carbon' in the name of the fund. This could be because:
- The provider has decided not to have a label.
- The fund doesn't meet the criteria to have a label.
Where this is the case, you'll still have access to clear and simple information about what the fund is investing in. You'll also see a statement explaining why it doesn't have a label.
Other funds may not include a label because the fund isn't in scope of our rules. This includes funds that are based outside the UK or different types of funds such as pension funds.
Anti-greenwashing
Greenwashing is when providers, such as banks, fund managers or insurers, claim their products or services are better for people or our planet than they actually are.
We want to protect you against greenwashing, so we introduced the anti-greenwashing rule. This rule reinforces that sustainability claims must be fair, clear and not misleading.
This makes it easier for you to make informed decisions about which investment products meet your sustainability objectives.
