Investing
SDR and sustainable investment labels: What do the FCA’s new rules mean?
5 min read 22 May 25
Please see our glossary for information on the financial terms used in this article.
For many, investing is no longer just about returns; they also want to support sustainable practices. However, knowing if a fund is truly sustainable can sometimes be a challenge. To help, the Financial Conduct Authority (FCA) introduced the Sustainability Disclosure Requirements (SDR), a package of measures that M&G Investments and all other UK FCA-regulated financial firms must follow. These rules are designed to bring greater clarity, transparency and accountability to sustainable investing through clearer labels and marketing, making it easier for you to understand, choose and compare funds that align with your sustainability goals.
In this article, we briefly outline the key components of the SDR and what this means for you as a private investor.
What are sustainable investment labels?
When looking at investment funds, you may see that those with a specific environmental and/or social goal will now display a sustainability label. At M&G, we are using these labels on our relevant funds to clearly show you their sustainability aims, making it easier for you make investment choices that align with your specific interests and values, whether that is investing in companies already leading on sustainability or those working to improve.
The four labels you might see on a fund are:
- Sustainability Focus: Investment products that “aim to invest in assets that are environmentally and/or socially sustainable”.
- Sustainability Improvers: Investment products that “aim to invest in assets that have the potential to improve environmental and/or social sustainability over time”.
- Sustainability Impact: Investment products that have an “aim to achieve a pre-defined positive measurable impact in relation to an environmental and/or social outcome”.
- Sustainability Mixed Goals: Investment products that include a mix of assets which “are already sustainable, have the potential to improve their sustainability over time, and/or aim to achieve a positive impact”.
We also have a range of unlabelled funds with sustainability characteristics. These are funds that do not have a specific sustainability goal but have sustainability characteristics embedded in their investment process. For example, the fund may invest in companies supporting climate transition.
To see our range of sustainability funds, visit our Sustainability products and strategies page. Furthermore, each fund page within our Fund Centre will clearly state whether a fund is labelled or unlabelled.
Why have some fund names changed?
You may have noticed that we have changed some of our fund names. In accordance with the SDR’s naming and marketing rules, this is to make sure that if a fund uses terms such as “social”, “green” and “impact”, it truly bears sustainability characteristics and backs that up in how it invests, ensuring complete transparency.
What is a consumer-facing disclosure and where can I find it?
To help you understand and compare a fund’s sustainability characteristics, SDR implemented standalone consumer-facing disclosures (CFD) for all labelled funds and unlabelled funds with sustainability characteristics. This is a short, two-page document that clearly summaries what the fund’s sustainability goals and/or characteristics are and the metrics used to track progress. It can be found on each of the fund pages of our sustainability products and will give you the essential information needed to understand if a fund’s approach aligns with your own values without requiring you to be an expert.
Visit our Sustainable investing page for more information about our approach to sustainability.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser. The views expressed here should not be taken as a recommendation, advice or forecast.