To be successful, a labelling programme should have a market share that is neither too high nor too low.
If the share of labelled products is very high, it may mean the labelling standards are not rigorous enough to allow for differentiation among products, which is the fundamental purpose of a label.
If the share is very low, it may indicate the standards are too rigorous, consumers are not aware of the label, or consumers do not value the features or performance represented by the label.
In my opinion, a 6.25 per cent market share is in the appropriate range.
It is better to be low than high at the outset because market share can be more easily increased than decreased.
So far, it seems the UK sustainability labelling programme is off to a good start.
But in the end, it will be investors who ultimately determine the value of the labels by the extent to which they use them when choosing among investment products.
Chris Fidler is head of global industry standards at the CFA Institute
