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UK funds to offer “clearer picture” of ESG products

Responsible_InvestmentFund managers operating in the UK are requested to begin identifying their ‘responsible investment’ funds from next year to give more clarity to investors.

The request comes from The Investment Association (IA), a trade body that has rolled out an industry-wide framework aimed at giving clarity and consistency to responsible investment products.

Firms are encouraged to adopt definitions which reflect various responsible investment approaches and include commonly-used terms such as stewardship, impact investing, exclusion, sustainability, along with environmental, social and governance – known as ‘ESG’ – integration.

“The investment management industry can now give its customers a clear picture of the opportunities available to them and the confidence that their chosen product matches their expectations,” claimed Chris Cummings, the IA’s chief executive.

According to the industry trade body, current terms and phrases are inconsistent and may confuse customers or leave them unable to find investment opportunities that match their responsible investment goals.

Cummings said: “One significant barrier to the growth of responsible investment has been the lack of a common language and framework that describes and categorises these approaches and products.”

A survey by the IA found that 85% of fund managers support a fund-level label. Providing clarity to investors was the single most cited reason for establishing a label in the research.

The definitions are based on consultation with over 40 fund management firms with a combined £5 trillion (€5.9 trillion) of assets.

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