I was quoted substantially in a recent Financial News article about the UK's sustainable investment regulations. You can read the full piece here.
“The costs will vary dramatically and it is hard to price at this stage,” said Gavin Haran, head of policy for asset management at Macfarlanes.
“At minimum, firms will need to prepare disclosures and amend their marketing materials to be compliant. Others might need to restructure their investments to meet the qualifying criteria for a label.”
Haran said the degree of change needed to achieve a label could vary drastically across asset classes, funds, and specific types of investment.
Haran points out that many funds, that are currently labelled in the market as ‘impact funds’, might find it difficult to demonstrate an investor contribution, one of the requirements for securing the FCA’s proposed sustainable impact label.
“While the fund invests in good solutions that achieve the enterprise contribution (e.g., a climate change solution), it isn’t necessarily the case that the fund’s investment will demonstrably make the outcomes 'more green' (the investment contribution),” he said.
“Conversely, real estate funds might find it easier to demonstrate investor contribution through ‘green retro-fitting’ of existing buildings, but find it more difficult to demonstrate the enterprise contribution.”
Despite the delays, Haran said UK asset managers seem willing to give the FCA a bit of leeway.
“There isn’t a sense across the market that fundraising has significantly slowed or slowed due to the SDR delay,” he said.
“Managers hope that the FCA will get it largely right first time to avoid some of the problems and revisions that the EU’s SFDR has unleashed.”
