Our report has surveyed 20 UKSIF members with £4.5 trillion in combined global AUM to gauge the investment community’s experience and use of sustainability data.

Report Headlines

• It found respondents overwhelmingly consider ESG information to be vital for decision-making, with sustainability factors viewed as central to their investment analysis, particularly regarding climate risk and governance. However, they felt the quality of the ESG data that they receive could be improved, with two-thirds rating it “moderate” and none rating it “very high”.
• When asked to describe their ‘biggest challenges’ with ESG data, 85% of respondents cited the accuracy of company disclosures, 70% highlighted their difficulty verifying or validating ESG data, and 70% pointed to gaps in ESG data coverage.
• These findings show the current state of company sustainability reporting is “fragmented and needs to evolve to help investors navigate the sustainability transition,” the report said.
• Lower standards of ESG data could result in material issues, such as funds being “misallocated due to hidden sustainability risks,” it further added.
• The report concludes there is a need for “a shift towards mandatory, standardised disclosures aligned with ISSB standards”, coupled with the introduction of climate transition plans. It says these measures could “directly address the data challenges and improve the consistency, completeness, and forward-looking nature of sustainability information.”

We have strongly welcomed the UK government’s decision to re-launch the Pensions Commission to consider the critical question of adequacy in pensions in the UK today and how, moving forward, we can deliver improved long-term outcomes for pension savers across the country.

In our letter, we welcome the opportunity to contribute to the Commission’s work programme and highlight a number of areas for exploration. This includes consideration of climate change and the global transition towards a net-zero economy, which we believe will be important for the Commission to explore and note that, at present, are not directly referenced in the Commission’s formal terms of reference from government. This also includes – as many different groups in the UK’s pensions and investment industries, as well as wider stakeholders, have highlighted – long-lasting reforms to automatic enrolment (AE) in the UK that can build on the success of AE to date in helping normalise pension saving.

Climate change cannot be divorced from the main focus areas highlighted in the Commission’s terms of reference. We suggest the Commission at a minimum highlight the need for the government’s pensions review to consider climate change and the global transition to net-zero. Specifically, a number of areas could be identified at a high-level for exploratory work for HM Treasury and the Department for Work and Pensions to consider, aligned to the Commission’s objectives.

This includes: clarification to fiduciary duty for occupational pension schemes in regards to system-level risks building on last year’s report from the Financial Markets Law Committee (FMLC); capturing investment opportunities for pension savers in the UK’s sustainable private markets landscape (such as clean energy infrastructure) including through a well-designed Value for Money (VFM) framework; the role of UK pension funds in advancing our international leadership position on transition finance; and the importance of a whole of economy transition for the pensions system’s long-term sustainability, including through supportive real economy incentives for schemes such as clear sector decarbonisation pathways.

Our thought leadership report on the FCA’s SDR regime- in collaboration with PwC UK- highlights a series of reflections on the experience of our asset manager members during SDR’s initial implementation phase, and sets out recommendations for our members to consider for effective implementation.

This covers labelling, disclosure preparation, governance, and communication, emphasising that, when applied well, the SDR regime can deliver clear benefits to firms. We have copied directly below some of the report’s main findings.

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Main findings

Our report highlights ten key findings:

1. Whilst there have been challenges in finalising the language in disclosures updated for SDR, many asset management firms highlighted the benefits of revisiting their approach to fund communications and disclosure over the course of the applications process with the FCA. Many asset managers stressed the value of the consumer-facing disclosures (CFDs) for more clearly explaining a fund’s sustainability objectives and approach.
2. The majority of labelled funds fall within the “Sustainability Focus” category, with more limited uptake of the “Improver,” “Impact,” and “Mixed Goals” labels.
3. While the SDR was designed as a principles-based regime, many asset managers found the FCA’s review process more detailed and prescriptive than expected.
4. Linked to this, asset managers said the prescriptive nature of the regulator’s approach to the regime led their firms to commit significant time and resources to its implementation.
5. The SDR’s ‘naming and marketing’ rules have become a significant feature of the regime, with higher-than-expected use by firms and this category being viewed by some as a “de facto fifth label”.
6. Many firms had completed comprehensive firm-wide ‘anti-greenwashing’ reviews and made targeted enhancements to align with the new regulatory expectations. Despite initial challenges, most asset managers noted that they have been able to adapt effectively to the new rule.
7. Most firms are planning to take a pragmatic approach to the upcoming SDR disclosures by evolving previous reports, such as their entity and product level Taskforce on Climate-related Financial Disclosures (TCFD) reports.
8. A consistent theme (mirroring last year’s SDR report) is a desire among market participants for greater international coherence in sustainability disclosures across different countries.
9. Asset managers observed a relatively limited appetite from distributors for labelled funds, yet firms thought distributor engagement would be important for the future market success of SDR labelling.
10. Firms also agreed that clarity from the FCA on the SDR’s trajectory, in particular its future extension to overseas funds, was as important as resolving near-term implementation challenges.

You can read the full report here.

This consumer guide, produced in partnership with Rathbones, as part of UKSIF’s annual Good Money Week, provides information on the new sustainable fund labels and how they work.

Please remember that this guide is not financial advice. It’s always best to speak to a financial adviser before making any investment decisions. A list of financial advisers that have signed up to UKSIF’s Financial Advisers’ and Wealth Managers’ Code of Conduct is available on our website here.

Read the full guide here. We hope you find this useful and informative.

Key takeaways for consumers include:

1. You don’t need to be an expert to start thinking about sustainable investment
2. Don’t be afraid to ask questions
3. Your views and values are unique
4. Remember no one label is ‘better’ or ‘worse’
5. The labels reflect a diverse range of approaches to sustainability

We welcome the opportunity to respond on behalf of our members to the government’s important consultation on the draft UK Sustainability Reporting Standards (SRS), based on the International Sustainability Standards Board (ISSB) disclosure standards.

As an internationally-leading financial centre and as a country that has played a vital role in recent years in shaping the priorities of the ISSB and its disclosure standards, we strongly believe that the close alignment of the UK’s upcoming SRS with the ISSB’s standards would mark an important moment in global efforts to promote a common, decision-useful baseline of sustainability and climate-related financial disclosures that can help advance long-term economic growth and the net-zero transition.

We largely agree with government’s amendments to the ISSB’s IFRS S1 and S2 standards and we very much welcome the consultation’s proposals that should assist with maximising opportunities for interoperability with the ISSB’s common baseline of sustainability and climate-related financial disclosures.

However, we note our preference for government’s approach not to amend the references to consideration of the SASB’s standards as currently proposed. Given, that this deviation from our view could facilitate the likelihood of less comparability and standardisation in disclosures among companies, and consequently in the wider economy, that could reduce the economic benefits of the UK’s SRS for investors and non-financial companies

UKSIF is pleased to respond to this important consultation on the introduction of climate transition plan requirements for certain companies in the UK. Should we see delivery of these requirements across the wider economy in the UK, implemented through an efficient and proportionate policy approach, we expect a number of tangible economic benefits over time for companies and investors and more broadly critical progress made towards government’s stated ambition for the UK to be a ‘world leader in sustainable finance.’

A summary of the main points in our consultation response are the following.

Summary- Main points in UKSIF’s response:

• Disclosure of transition plans: We recommend a ‘pathway approach’ towards mandatory disclosure (‘Option 2’) for in-scope companies to maximise the benefits of transition plans for users and preparers, while promoting proportionality in government’s rules. An initial ‘comply or explain’ period (‘Option 1’) would apply at first for entities and the length of this period would vary depending on the type of company in question.
• Scope of requirements: The UK’s Task Force on Climate-related Financial Disclosures (TCFD) regime offers a positive, familiar starting point for government to consider with transition plans initially rolled out to large listed and large private companies before extending to wider groups (e.g. ‘economically significant’ entities).
• Role of the TPT’s Disclosure Framework: For companies within scope, requirements should encourage companies to actively consider the TPT’s Framework and to report against its components as far as is possible. Expectations could be strengthened here over time.
• Frequency and location of transition plan reporting: We support publication of corporate transition plans on a triennial basis, in line with the TPT Framework’s recommendation, and would like to see these published through a standalone report. To provide necessary flexibility for preparers, we suggest the inclusion of cross-referencing and signposting provisions in the final rules which could help reduce duplication across some corporate reporting.
• Climate alignment targets: There should be an emphasis on in-scope companies disclosing plans that are based on science-based pathways aligned with the Paris Agreement goals, rather than a specified temperature alignment objective. Linked to this, policymakers should focus on supporting companies to engage in high-quality transition plan disclosure versus considering provisions on the implementation of plans by corporates.
• Transition plan dependencies: Requirements should very clearly provide necessary flexibility for preparers to disclose a full range of transition plan dependencies, which we expect will carry much value for preparers, users of plans, policymakers, and other groups.
• Role of UK’s SMEs: There are opportunities for government to actively support UK SMEs, which continue to receive climate-related data requests from different parties, sometimes relating to these groups’ own transition plans. Government, alongside wider stakeholders, should encourage SMEs to adopt the upcoming UK SME Voluntary Emissions Standard which we hope can support this group respond to sustainability information requests.
• The UK’s wider reporting landscape: Transition plans can be effectively integrated within the UK’s upcoming sustainability reporting landscape and wider financial reporting. This process can be facilitated by simplification to existing reporting, alongside wider steps such as a smooth transition in the coming years from TCFD-aligned rules to the UK’s Sustainability Reporting Standards (SRS) which will over time assist with reporting pressures for companies.

We welcome the opportunity to provide feedback on the recently published draft guidance for the UK Stewardship Code 2026. It is broadly positive to see the Financial Reporting Council (FRC) opt to produce this very helpful guidance, which we hope can be valuable in supporting UKSIF’s members to report on their stewardship-related policies, activities, and outcomes over the coming months during the transition to the new Code.

We hope that the Stewardship Code guidance, which in its current draft form has generally been well-received by our members, can help meaningfully reduce the potential reporting burden incurred in the short-term for signatories and the additional costs associated with the new reporting requirements.

We would highlight upfront our broad overall support for the FRC’s draft Code guidance as currently published, which contains a number of important points and strengths. These include the following: the relatively flexible language it has adopted that complements the new Code’s principles, the direct references to systemic risks (e.g. guidance that signatories describe efforts to mitigate these risks to deliver good client outcomes), the inclusion of dedicated guidance on stewardship ‘case studies’, the recognition of the role of stewardship played across different asset classes beyond listed equities, among other areas.

We would like to see the finalised guidance help reinforce the Code’s expectations to signatories and prospective signatories that a high-quality standard for investor stewardship practice and stewardship reporting under the revised Code remains in place in the UK’s market. This will be a very important message to convey to our industry, given the perception from some of our members that the revised Code has, in some respects, experienced some dilution in terms of its overall ambition and role as an effective accountability mechanism for good stewardship among investors.

Our private letter to the Financial Conduct Authority’s (FCA’s) CEO sets out a series of recommendations to the regulator aimed at maximising the opportunities of the SDR regime in the UK’s market. The letter reflects on the experience of our members so far over the regime’s first phase and proposes certain changes that could be considered to support the SDR’s smooth implementation over the coming months and beyond.

We look forward to continue engaging with the FCA and our members on the SDR, please reach out directly to the team if you would like to view a copy of our private letter in confidence.

UKSIF supports the objectives of this call for evidence and would strongly welcome the Sustainable Finance Disclosure Regulation (SFDR) review considering how this framework can be enhanced further to the benefit of financial market participants, investors, and clients across Europe. Please note the 4,000 word character limit for stakeholder responses to the call for evidence.

While the SFDR has elevated consideration of sustainability within financial markets in Europe and more widely, we see a need for the framework to build on its good, initial foundations and transition over time towards a more decision-useful, transparent, and holistic sustainability disclosure and voluntary product classification system. These product categories should reflect an appropriately diverse range of investment approaches to sustainability, broadly aligning where possible with the UK Sustainability Disclosure Requirements (SDR) label categories.

Drawing on our work in the UK’s investment industry in recent years on the FCA’s SDR, we emphasise the need for the review to consider the following areas:

1. Putting end investors at the heart of the new SFDR
2. Consideration of mutually exclusive product categories
3. Interoperability with third-country regimes (e.g. the UK)
4. Alignment across sustainable finance initiatives