UK asset management trade body looking at sustainable fund labelling system

Investment Association’s SRI committee is chaired by Aviva’s Mark Versey

The Investment Association, the trade body that represents UK firms managing over £6.9trn (€7.6trn) in assets, is looking at a labelling system for UK sustainable funds and disclosure by asset managers of non-financial information.

The work is part of a new SRI committee within the Investment Association (IA) chaired by Mark Versey, CIO of Aviva Investors Real Assets. It has 35 members and has had two meetings already. Versey says it is one of the largest committees in the IA.

The IA already does much work on stewardship and engagement, so this will not be part of the SRI committee. It will look at developing policy in the area of sustainable investment and develop positions on different initiatives such as the European Commission’s action plan on sustainable finance.

Its other workstreams for 2018 include looking at labels and definitions for sustainable investment. The Working Group on Standard Definitions and Standards is chaired by Will Oulton, Director of Responsible Investment at First State Investments.

Oulton says the working group will track approaches and strategies to labelling sustainable funds across Europe. It comes as the European Commission is seeking to develop its own taxonomy for sustainability as part of its action plan.

Oulton said: “The working group, on behalf of the IA, is reviewing the range of fund ESG labelling systems that currently exist across Europe. As the European Commission is currently developing their thinking on an Eco label and sustainable business taxonomy, the group have noted that there is little commonality across the current systems.

“This includes issues such as with their sponsors (which range from trade groups, commercial entities to governments), their criteria, their target markets and stated benefits.“With the EU work progressing rapidly, such systems and their value will likely be a subject of increasing scrutiny and industry debate. The IA working group will review the purpose and benefits of such systems with a view to assessing the value and appropriateness for the UK market.”

Another workstream will focus on disclosure by asset managers of non-financial information and guidance for asset managers on the UN Sustainable Development Goals.

The IA has also been working closely with the European Commission on its action plan focusing on the sustainable taxonomy and investor duties.

Galina Dimitrova, Director of Investment and Capital Markets at the IA said: “The Investment Association supports the European Commission’s commitment to being a global leader in sustainable finance and we look forward to working together to progress this agenda.

“As significant investors in economies across Europe, it is our role to help everyday savers and investors achieve both their financial as well as their environmental and social goals.

She added: “As the European Commission’s package of proposals is both comprehensive and far-reaching, it is vital that these initiatives work harmoniously together and do not have the unintended consequence of putting a brake on existing economic activities that already contribute to a more sustainable economy.”

As part of the SRI committee, the IA is also involved with the work of the UK social impact investment implementation taskforce as reported by RI earlier this year.

The IA is also working on including sustainable and responsible investment data in its future annual asset manager surveys.