Fidelity International to Adopt FCA Sustainability Label for Three Funds
Investment management firm Fidelity International announced today plans to adopt the “Sustainability Focus” label introduced by the Financial Conduct Authority (FCA)’s Sustainability Disclosure Requirements (SDR) for three funds within its UK domiciled equity fund range.
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.
According to Fidelity, the three funds, the Fidelity Sustainable UK Equity Fund, Fidelity Sustainable Global Equity Fund and Fidelity Sustainable European Equity Fund, represent assets totalling more than £865 million, and will fit the new Sustainability Focus label, with at least 70% of gross assets invested in companies which contribute to environmental and/or social outcomes, and with monitoring and disclosure requirements met through Fidelity’s proprietary Sustainable Development Goal (SDG) tool and the EU Taxonomy.
The firm added that it is reviewing opportunities for further SDR label adoption in its fund range.
Jenn-Hui Tan, Chief Sustainability Officer at Fidelity International said:
“We welcome the introduction of SDR and see it as an important stage in the development of sustainable investing in the UK, giving investors greater confidence to allocate to sustainable funds. We believe the ‘Sustainability Focus’ label aligns well with the established investment approach of these funds and builds on our approach to managing SFDR Article 9 funds for European investors.”