Eight out of ten investment firms believe that the Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements (SDR) labelling system has reduced greenwashing across the industry.
This is despite only 106 funds having adopted one of the labels.
According to the Investment Association (IA), one of the issues surrounding funds adopting a label is the FCA authorisation process.
Almost half (49%) of firms had at least one fund they considered adopting a label for, but later decided against it.
A third (32%) opted against it after going through the FCA authorisation process.
IA director of market insights Miranda Seath added that the authorisation process took longer than 20 weeks for some firms.
Out of the four labels, Sustainability Focus is the most popular label to date, with 63 funds approved.
This is followed by Sustainability Impact (22), Sustainability Improvers (17) and Sustainability Mixed Goals (4).
IA market insight manager Sarah Shehabi said that the organisation originally predicted that the Sustainability Mixed Goals label would be the most popular.
In total, there are 341 non-labelled funds with sustainable characteristics.
Castlefield’s funds fall under this category. At the end of 2024 it said it is taking a “wait and see” approach to adopting the FCA’s SDR labels for its funds, but it does “remain supportive of the labelling system”.
Castlefield was originally established in 2002 in Manchester with the focus of financially looking after the charity sector.
FCA director of sustainable finance Sacha Sadan said that the future of sustainability is bright and that people should be patient in regards to the uptake of SDR labels.
Sadan made these comments at the IA Sustainability and Responsible Investment Conference 2025 on 30 April.
Sadan revealed how during the first week applications to the labelling system opened, people started to get nervous as no one had applied yet.
He believes it will continue to grow over time and the whole purpose of the SDR regime was to reduce greenwashing, which according to the IA’s data it clearly has.
In order to obtain these the results, the IA ran a survey of responses from 50 member firms running funds with SDR labels and/or funds with sustainability characteristics.
