Fidelity International has confirmed that it will implement the FCA’s newly launched “Sustainability Focus” label across three of its UK-domiciled equity funds that are subject to the Sustainability Disclosure Requirements (SDR). This makes Fidelity International align with its sustainable investing commitment, showing the firm’s motivation and proactive approach to meeting up-to-date regulatory requirements. The three funds that now bear this classification are the Fidelity Sustainable UK Equity Fund, the Fidelity Sustainable Global Equity Fund, and the Fidelity Sustainable European Equity Fund, which have assets under administration of more than £865 million in total.
Sustainable investment products have been made clearer and more secure through the framework introduced by the FCA in November 2023. With a view to mitigating the growing risk of greenwashing and assuring full transparency, the SDR introduces rules for naming, marketing, and managing funds with a focus on sustainability. According to these rules, sustainability-related terms can only be included in product names and marketing materials if they are combined with one of the sustainability labels approved by the FCA. With the help of this framework, the FCA aims to equip investors with the right tool to evaluate the sustainability qualities of an investment product and make prudent investment decisions.
The SDR has four unique sustainability labels, each with its own set of criteria tailored to support different investment philosophies. The “Sustainability Focus” label, adopted by Fidelity for these three funds, has been dedicated to products that invest predominantly in environmentally or socially sustainable assets. To qualify for this label, at least 70% of the fund’s assets must be aligned with sustainability objectives, with clear and ongoing disclosure requirements. Other categories within the SDR framework are “Sustainability Improvers,” focusing on assets with the potential to improve sustainability over time; “Sustainability Impact,” focusing on investments designed to achieve a measurable and positive environmental or social impact; and the newly created “Sustainability Mixed Goals,” referring to funds which combine several sustainability objectives.
The use of the “Sustainability Focus” label by Fidelity shows that it satisfies the stern requirements of the FCA and is also committed to transparency and accountability in sustainable investing. The firm has its proprietary Sustainable Development Goal tool to evaluate and track the environmental and social outcomes of investments. This tool, in conjunction with alignment against the EU Taxonomy, means Fidelity’s funds meet the strict requirements needed under the SDR framework. These measures focus on providing investor transparency regarding how the funds are contributing to environmental and social objectives and will build investor confidence in sustainable investment options.
Originally scheduled to commence in December 2024, the SDR naming and marketing rules are postponed now to April 2025. The FCA granted this extension because it allows investment firms additional time for practice adjustments according to the newly dictated scheme of things. Fidelity is already starting the use of the “Sustainability Focus” label before seeing full implementation of the said rules effective after April 2025, which further highlights its head start in sustainable finance.
Jenn-Hui Tan, Chief Sustainability Officer at Fidelity International, also welcomed the FCA’s new framework, calling it an important stage in advancing sustainable investing practices in the UK. “We welcome the introduction of SDR and see it as an important stage in the development of sustainable investing in the UK, giving investors greater confidence to allocate to sustainable funds.”. We believe that the ‘Sustainability Focus’ label aligns well with the established investment approach of these funds and builds on our approach to managing SFDR Article 9 funds for European investors,” he said.
Fidelity’s adoption of the FCA’s sustainability label builds on its existing expertise in managing sustainable investments. The company has a strong track record of providing sustainable finance solutions, such as SFDR Article 9 funds, tailored to European investors. In adopting the SDR labels, Fidelity strengthens its capability to provide credible and impactful sustainable investment options for UK investors, remaining in compliance with the ongoing evolution of regulatory standards while maintaining its commitment to environmental and social objectives.
As part of a broader strategy by Fidelity to introduce sustainability into its investment propositions, the SDR label has been adopted for these three funds. The firm is actively considering further applications of SDR labels across its fund range, evidencing its long-term commitment to sustainability. By this move, Fidelity stands out as a front-runner among sustainable investors, having its products characterized by the highest standards of integrity and transparency.
Fidelity’s use of its SDG tool and adherence to the EU Taxonomy further underpin commitment to measurable and transparent results. The tools enable the firm to channel its investments towards global sustainability goals and report on their impact. It strengthens accountability, which is a regulatory requirement and would meet the demands of investors for high-quality, sustainable investment products.
The FCA’s SDR framework stands as a notable point of development in the evolution of sustainable investing within the UK financial sector. Fidelity’s use of the “Sustainability Focus” label- indeed, one of the first institutions to do so-demonstrates its leadership in this space and commitment to helping investors meet their sustainability objectives. By aligning its funds with the SDR criteria and ensuring robust monitoring and reporting processes are in place, Fidelity is going to be increasing its reputation as a reliable specialist for sustainable investment offerings.