Sustainable disclosure requirements: raising standards and boosting confidence
- 18 July 2025 (5 min read)
Jane Wadia, AXA Investment Managers’ head of sustainability, considers the challenges that fund managers have faced achieving sustainability labels under the FCA’s Sustainability Disclosure Requirements, and why some may have found it easier than others.
The FCA’s Sustainable Disclosure Requirements (SDR) aim to improve the information being provided to consumers about the sustainability characteristics of their investments. It includes rules around the use of words like ‘impact’ and ‘sustainable’ in fund names, how funds are described in literature and marketing and introduces a range of SDR labels that funds can adopt if they meet the criteria.
The need for some form of regulation has been clear for some time. Demand for environmental, social and governance (ESG) integrated and sustainable investing has skyrocketed in recent years, but it’s become increasingly difficult for investors to make the best decisions due to the lack of a common framework. In this maelstrom of information, accusations of ‘greenwashing’ have been hard to refute as funds marketed as ‘sustainable’ or ‘impact’ have varied enormously in approach and potential outcomes, given the lack of agreed definitions of these terms in an investment context.
The SDR regulations help to fill this gap for consumers and provide asset managers with a mechanism to provide clear and comparable information to investors.
Good for investors and good for investing
We see two very positive outcomes of SDR. It will boost the comparability of funds while also raising standards of responsible investing across the industry, which should in turn boost confidence of investors looking for sustainable investment options.
- The naming and marketing rules should provide investors with greater confidence that they’re investing in line with their own wishes.
- Consistent reporting standards will make it easier to compare different products and see whether they’re achieving their stated goals.
- Greater scrutiny will help to address consumer cynicism and rising concerns over ‘greenwashing’.
- Fund labels provide a rigorous regime for categorising sustainability objectives.
According to research published by the Investment Association in June 20251 , 110 funds have adopted labels. This is somewhat less than the number of funds that asset managers said they intended to adopt labels for when surveyed last year – in fact, it’s about half.
This suggests making funds suitable for sustainability labels has proved less straight-forward than first anticipated – the Investment Association research shows that every fund manager had to pull the first draft of their application for fund documentation changes during the process. And it has taken time – the research shows that it took, on average, 20 weeks and four separate meetings with the FCA to get final approval for fund document updates required before adopting a label.
While it’s perhaps disappointing that take-up has been less than anticipated, it also demonstrates that the SDR regulations are sufficiently rigorous to inspire investor confidence. Far from being a ‘rubber stamp’, the requirements set out high standards that have been more difficult to meet than many thought.
Leveraging existing expertise
As at the end of June 2025, AXA Investment Managers UK has adopted labels for six of its funds. We would absolutely concur with our peers that the process has been an exacting one, but the fact that our funds were very much philosophically aligned with the principles of the SDR labels was a significant advantage. Having sustainable objectives and robust investment processes built-in to our funds even before the introduction of the regulations meant we were closer to alignment with SDR than we might otherwise have been.
In addition, we have been able to draw on our long experience in meeting the requirements of local EU labels, such as French ISR and Belgium's Towards Sustainability, which have existed for many years. This in-house expertise proved invaluable and made it very natural for us to adapt to the SDR regulations.
You can see the strengths of our sustainable investment capabilities when comparing our labelled funds with the other fund managers who took part in the IA research. Our four Sustainability Improver-labelled funds make up 20% of all the funds with this label reported in the IA research, for example.
Of particular note is that 50% of our labelled funds are fixed income funds, compared to just 16% of the overall total of labelled funds, according to the IA research; this demonstrates our existing experience in bringing high sustainability standards to fixed income portfolios.
Additionally, we believe we are one of only three fund managers to have adopted the Sustainability Impact label in both equity and fixed income funds, underscoring the relevance of impact investing in listed assets and our ability to meet the very high bar set by the impact label.
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Sustainability Improvers
AXA Carbon Transition Sterling Buy & Maintain Credit Fund
Visit the fund centre to find out more about the AXA Carbon Transition Sterling Buy & Maintain Credit Fund.
AXA Carbon Transition Global Short Duration Bond Fund
Visit the fund centre to find out more about the AXA Carbon Transition Global Short Duration Bond Fund.
AXA UK Sustainable Equity Fund
Visit the fund centre to find out more about the AXA UK Sustainable Equity Fund.
AXA Global Sustainable Managed Fund
Visit the fund centre to find out more about the AXA Global Sustainable Managed Fund.
Sustainability Impact
Not everything needs a label
An often-overlooked aspect of SDR is that the FCA has, alongside the labels, established broader guidelines to categorise funds that incorporate ESG and sustainability in their approach as ‘ESG integrated’ or ‘sustainable non-labelled’. These funds will not have met the specific criteria for labels but are viewed as better-aligning with the regulator’s definition of sustainability. Because ESG considerations are deeply integrated in AXA IM’s broader investment process, the majority of our funds that don’t have a label still meet the requirements of the ‘ESG integrated non-labelled’ category.
Overall, we see the SDR regulations as a significant step forward for responsible investing in the UK. They provide much-needed clarity for investors and the opportunity for asset managers with genuine sustainability characteristics to stand out.
Disclaimer
Important information
Fund-specific risk factors
Carbon Transition risk
AXA Carbon Transition Global Short Duration Fund
AXA Carbon Transition Sterling Buy And Maintain Credit Fund
Concentration risk
AXA People & Planet Equity Fund
Credit risk
AXA Carbon Transition Global Short Duration Fund
AXA Carbon Transition Sterling Buy And Maintain Credit Fund
AXA Green Short Duration Bonds
Currency risk
AXA Global Sustainable Managed Fund
AXA People & Planet Equity Fund
Equity risk
AXA Global Sustainable Managed Fund
AXA People & Planet Equity Fund
AXA UK Sustainable Equity Fund
ESG risk
AXA Carbon Transition Global Short Duration Fund
AXA Carbon Transition Sterling Buy And Maintain Credit Fund
AXA Global Sustainable Managed Fund
AXA Green Short Duration Bonds
AXA People & Planet Equity Fund
AXA UK Sustainable Equity Fund
Industry sector risk
AXA People & Planet Equity Fund
Interest Rate risk
AXA Carbon Transition Global Short Duration Fund
AXA Carbon Transition Sterling Buy And Maintain Credit Fund
AXA Global Sustainable Managed Fund
AXA Green Short Duration Bonds
Prepayment and extension risk
AXA Carbon Transition Global Short Duration Fund
AXA Green Short Duration Bonds
Index-linked bonds risk
AXA Carbon Transition Global Short Duration Fund
AXA Green Short Duration Bonds
High yield bonds risk
AXA Carbon Transition Global Short Duration Fund
AXA Green Short Duration Bonds
Emerging Markets risk
AXA Carbon Transition Global Short Duration Fund
AXA Global Sustainable Managed Fund
AXA Green Short Duration Bonds
Risks linked to investment in sovereign debt
AXA Carbon Transition Global Short Duration Fund
AXA Global Sustainable Managed Fund
AXA Green Short Duration Bonds
UN SDG alignment risk
AXA People & Planet Equity Fund
Smaller companies risk
AXA People & Planet Equity Fund
Stock lending risk
AXA Carbon Transition Global Short Duration Fund
AXA Global Sustainable Managed Fund
AXA Green Short Duration Bonds
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