The first part of the U.K.’s Sustainability Disclosure Requirements (SDR), also known as the anti-greenwashing rule, will start at the end of May. After that, there will be several important steps to enhance the transparency and naming conventions of sustainable investment funds.
It’s the most important law so far to promote environmental, social, and governance considerations in the U.K. financial sector, according to Morningstar Sustainalytics Director of ESG Policy Research Arthur Carabia in a new paper.
Arthur Carabia – Director, ESG Policy Research, Morningstar Sustainalytics:
“The SDR is important because it will impact how sustainable funds are created and marketed to investors. With the SDR's disclosures for consumers, investors should be able to make more educated decisions about their sustainable investment choices.”
Carabia further describes the SDR as being “less specific on data, but more thorough” compared to the EU’s Sustainable Finance Disclosure Regulation (SFDR). He explains that the SDR's strength lies in creating minimum standards for using sustainability-related terms in fund names. The new regulations include measures to prevent greenwashing, additional sustainability labels for ESG funds, and requirements for product information and customer-oriented ESG-related content.
