Schroders to Adopt All Four of the FCA’s SDR Sustainability Labels for Funds
Global investment manager Schroders announced plans to adopt each of the four sustainable investment labels – “Sustainability Focus”, “Sustainability Impact”, “Sustainability Improvers” and “Sustainability Mixed Goals” – introduced by the UK Financial Conduct Authority (FCA)’s Sustainability Disclosure Requirements (SDR) regulation, becoming, the firm believes, the first to do so.
Anna O’Donoghue, Global Head of Product Development and Governance, Schroders, said:
“We believe we are the first firm to publicly confirm the intended adoption of all four SDR labels across all the funds we have sought them for. We have been an early adopter of SDR, working closely with the FCA throughout to ensure our funds adhere to the required standards. We are appreciative of the FCA’s ongoing collaboration.
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, which take effect in April 2025, 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 pre-contractual and ongoing product-level disclosures for products using a label.
Schroders announced in December that it would adopt the Sustainability Focus label for 8 funds, and Sustainability Impact for 2 funds, and the firm’s high-net-worth wealth management business Cazenove Capital followed up in January with plans to adopt the Sustainability Focus label for three of its own funds.
The firm also announced earlier this month that it had been awarded a $6.3 billion sustainable investment mandate by UK wealth manager St. James’s Place (SJP) to manage a fund with the “Sustainability Focus” label.
With the new announcement, Schroders unveiled plans to adopt SDR labels for three more funds, including the Sustainability Mixed Goals label for the Schroder Sustainable Future Multi-Asset Fund, the Sustainability Improvers label for the Schroder European Sustainable Equity Fund (which will be renamed as the Schroder European Climate Transition Fund), and the Sustainability Focus label for the Schroder Global Cities Real Estate fund.
O’Donoghue added:
“The labels will help to differentiate our sustainable product range focused on delivering active outperformance, making it easier for clients who are seeking sustainable outcomes to identify opportunities to invest.”