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UK Asset Managers Cautious About FCA Sustainability Labels
UK fund managers are hesitant to adopt new sustainable investment labels introduced by the Financial Conduct Authority (FCA) on July 31st. While the labels – Sustainability Impact, Sustainability Focus, Sustainability Improvers, and Sustainability Mixed Goals – aim to increase transparency and combat greenwashing, According to Environmental Finance, only one firm, AEW, has so far chosen to use the “Impact” label for its UK Impact Fund.
The complexity and rigorous requirements of the application process have been cited as reasons for the slow uptake. Additionally, fund managers must ensure their fund names and marketing materials comply with strict standards by December 2nd, which could lead to more widespread adoption later in the year.
The FCA’s initiative extends beyond labeled funds to all investment products making ESG claims, such as “green” or “low carbon.” Industry experts highlight the importance of these labels in improving transparency and fighting greenwashing. However, smaller firms face challenges in developing sustainable investment frameworks and aligning their portfolios with the fund’s objectives.
While the FCA’s labeling system is a step forward for sustainable investing, the industry’s cautious response underscores the difficulties in implementing these new regulations.
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