FCA heralds sustainable investment labelling

The FCA has confirmed that investment funds that meet criteria for environmental or social goals will be labelled, so investors can more clearly see what they are investing in.

From 31 July 2024, four labels will be used to recognise investment funds with different sustainability goals. The labels are:

  • Sustainability Focus: funds that invest largely in assets with a focus on sustainability for people or the planet, such as supporting solar, wind or hydrogen energy production.
  • Sustainability Improvers: these will be labelled on firms who are looking to improve their sustainability but may not be at present, including those with credible plans to reach net zero by 2050.
  • Sustainability Impact: for funds that invest in solutions to sustainability challenges, such as renewable energy generation and social housing.
  • Sustainability Mixed Goals: these funds invest in a mixture of the labels above.

Funds that contain these labels will need to provide clear information on the specific goal of the fund, its approach to achieving it, and give annual updates on progress towards the goal.

If a fund is not labelled, this will mean the provider either has decided not use a label, or has not met the criteria. From 2 December, if an unlabelled fund is making sustainability claims, information about what the fund is investing in will still be provided, with an explanation of why there is no label.


Harry Wells