'Ethical' and 'sustainable' funds brace for stricter rules

Greenwashing has been as great a problem for investors buying funds as those picking shares, with labels such as 'responsible' and 'sustainable' proliferating across all manner of portfolios in recent years. But the implementation of rules cracking down on such practices could slowly make life easier for those who wish to invest with an eye on a sustainable future.

More stringent rules around the marketing of funds with a sustainable remit come into force on 2 December as part of the Financial Conduct Authority's Sustainability Disclosure Requirements (SDR) regime. Fund providers can apply one of four different labels – sustainability focus, sustainability improvers, sustainability impact or sustainability mixed goals – to their offerings, with different requirements for each.