Asset managers Cazenove Capital and Aegon Asset Management each announced plans to use the new “Sustainability Focus” label introduced by the UK Financial Conduct Authority (FCA)’s Sustainability Disclosure Requirements (SDR) for a series of funds, marking the latest step in the adoption of the regulator’s new sustainable investment fund labelling system.

The FCA’s SDR requirements were  introduced by the regulator in November 2023, aimed at helping investors assess the sustainability attributes of investment products, and to avoid greenwashing risk, to portfolio managers. The SDR included naming and marketing rules for investment products, requiring that sustainability-related terms can only be used in product names and marketing if a label is used.

The FCA rules introduce four labels intended to help consumers to differentiate between the sustainability objectives and investment approaches of investment products. These include Sustainability Focus, for products that aim to invest in assets that are environmentally and socially sustainable; Sustainability Improvers, investing in assets that have the potential to improve environmental and/or social sustainability over time; Sustainability Impact, investing with an aim to achieve a predefined positive and measurable environmental or social impact, and; Sustainability Mixed Goals, a newly introduced category for funds that invest across different sustainability objectives and strategies aligned with the other categories. The rules include a series of criteria for products to use the labels, including a requirement for at least 70% of the products assets to ordinarily be invested in line with the label’s objective, as well as ongoing product-level disclosures for products using a label.

While initially scheduled to come into force in December 2024, the FCA delayed implementation of the new naming and marketing rules under the SDR to April 2025, to give more time for firms to meet the new standards.

Cazenove, the high-net-worth wealth management business of Schroders, said that it will adopt the Sustainability Focus label for three of its sustainable flagship funds, the SUTL Cazenove Charity Sustainable Multi-Asset Fund for charity clients, and both the SUTL Cazenove Sustainable Growth Fund and the SUTL Cazenove Sustainable Balanced Fund, which collectively manage more than £3 billion of assets. Cazenove added that the move is aimed at giving “clients confidence in the integrity and robustness of Cazenove Capital’s sustainable investment approach, and commitment to managing investments in line with their values.”

Emilie Shaw, Sustainable Solutions Lead, Cazenove Capital, said:

“We are proud to be one of the first wealth managers to announce the planned adoption of the sustainability labels. This milestone underscores our enduring commitment to aligning clients’ assets with their values, and solidifies our position as one of the premier choices for sustainable wealth management solutions.”

Aegon AM plans to adopt the Sustainability Focus label for its Aegon Sustainable Diversified Growth and Aegon Sustainable Equity Funds, with the firm stating that the move “underlines Aegon AM’s commitment to helping clients meet both their financial and sustainable objectives.”

Miranda Beacham, Head of Responsible Investment at Aegon Asset Management UK said:

“We are very pleased to see SDR is gathering momentum in providing greater clarity and confidence in the market for our clients and look forward to adopting the new labels for our funds.”