In terms of the timeline, we would expect most managers looking to adopt labels to do so by the end of 2024. The anti-greenwashing rule has already come into effect, and adherence to fund naming and marketing rules must be in place by December 2.
Both criteria of the labels and process of applying for them under the SDR is different to national EU labels, however. Having experience in this regard will be extremely useful for us and other managers in optimising outcomes for investors with the establishment of the SDR.
The likelihood at a market level in the UK is that the number of funds that adopt the labelling structure will still be in a small minority relative to the rest of the fund universe.
This is no bad thing as advisers will have a clearly signposted and regulatory-approved set of choices to offer end investors, and fears of greenwashing will have an obvious answer.
While much is yet to be seen as the implementation gets under way, the hope with the SDR is the market will become ultimately better defined by the new labelling regime and more efficient in capital allocation.
It will ensure asset managers and advisers alike can offer clear indicators for end consumers about alignment of their investment propositions with climate and sustainability goals.
Jane Wadia is head of sustainability, core products and clients at Axa Investment Managers
