The sustainability disclosure and labelling regime will see the introduction of four labels aiming to help consumers navigate the investment market from July 31.
As UK asset managers prepare for the investment labels, disclosure, and naming and marketing rules, some providers are also working to make their environmental, social, and governance questionnaires and profiling tools ready for the regime.
Stephen Hood, proposition development manager at Aviva, says the business intends to support the sustainability disclosure requirements labelling regime in its adviser ESG tooling.
“If a fund has one of the four sustainability labels we will indicate this, show the fund’s objectives and link to its associated disclosure documentation,” he says. “However, our tooling profiles a fund by assessing the ESG characteristics of its underlying holdings and weightings, and we will retain this approach.”
And while Aviva’s ESG tool does not proactively filter or suggest funds based on preferences, Hood says there are plans to enhance its search and filtering capabilities so advisers can identify and compare funds with a sustainable investment label.
“As ESG ratings and data provision are not yet subject to regulation, and there are variations in methodologies between current providers, it will be interesting to see whether this identifies challenges and discrepancies when reporting ESG metrics on the underlying holdings of funds with one of the sustainability labels,” he adds.
At EQ Investors, head of sustainability Louisiana Salge says the wealth manager’s sustainability questionnaire already embraces the ‘one-size-does-not-fit-all’ approach that SDR makes explicit.
But, she says, EQ will amend some of the language in its questionnaire to reflect naming and marketing rules in the regulator’s extension of the SDR regime to portfolio management when the policy statement is released, as well as to reflect the SDR labels that EQ Investors’ portfolios will align to.
“Other questionnaires that we observe in the current market either aim to establish detailed client sustainability preferences without helping to match these to available products, or are simplistic questionnaires that lead to one single ESG/ethical/sustainable option for all clients with any degree of sustainability preferences,” Salge says.
“Given that many sustainability questionnaires thus far have focused on establishing preferences, but often don’t help advisers match these with actual available products, integrating language aligned with SDR and labels into questionnaires could help provide at least part of this bridge.”
Andrew Storey, group innovation director at EV, will also be making an update to one of its questionnaires.
The fintech provider offers two questionnaires: one asks about the priority of sustainable investing, which will not see any changes; the other, about sustainable preferences, comprises around seven questions that aim to identify categories that may fit a client.
“We identified questions that allowed you to work out which of the labels would be important for a client,” says Storey. “We do need to do one final update, which is to put in the extra label that they've come up with.”
