Launch of industry-wide common language brings clarity to responsible investment
- First industry-wide framework to categorise most common approaches to responsible investment
- New data collection on responsible investment
- 85% of investment managers responding to the IA’s consultation support a fund-level label
The investment management industry has come together to agree a common language and clear product categorisation for responsible investment approaches to help savers better access and compare funds with a focus on environmental or social outcomes. Currently a variety of terms and phrases are used in different ways, which could leave customers confused or unable to find the investment opportunities to match their diverse responsible investment goals.
The industry-wide definitions, published today by the Investment Association (IA), aim to provide clarity and consistency for savers, and are based on consultation with over 40 investment management firms, representing £5 trillion of assets. Investment managers are encouraged to adopt the framework and definitions, which reflect the wide range of responsible investment approaches, including commonly-used terms such as: ESG integration, stewardship, impact investing, exclusions and sustainability focus.
As part of the IA’s aim to help savers navigate the sustainable and responsible investment fund market, the trade body is continuing to explore the creation of a UK retail product label. More than 8 out 10 firms (85%) which responded to the industry consultation support a fund-level label. Providing clarity to investors was the single most cited reason for establishing a label, with firms also keen to highlight the UK’s role as a global leader within sustainability and responsible investment.
Chris Cummings, Chief Executive of the IA, said:
“Today’s savers want to understand the impact of their investments on the world around them. One significant barrier to the growth of responsible investment has been the lack of a common language and framework that describes and categorises these approaches and products. The agreement of industry-wide definitions provides consumers with that much-needed clarity and choice. The investment management industry can now give its customers a clear picture of the opportunities available to them and the confidence that their chosen product matches their expectations. This is a new milestone in making it easy for people to choose a responsible investment.”
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:
“We welcome this industry-wide initiative to bring consistency and clarity to the responsible investment market. The FCA is working to enable firms to manage the risks and opportunities from moving to a low carbon economy as well as setting expectations around the creation of green financial products for consumers and we look forward to working with the investment management industry to achieve these aims.”
From the start of next year IA members will also be asked to identify which funds should be classified as having responsible investment characteristics to help bring further clarity to this market. The IA will publish statistics on funds with responsible investment characteristics later in 2020.
To view the IA's Responsible Investment Framework:
For further information, please contact:
Katie Martin, Head of Communications: [email protected]
T: +44 (0)20 7269 4655
Helen Ayres, Communications Manager: [email protected]
T: +44 (0)20 7269 4620
David Parton, Communications Executive: [email protected]
T: +44 (0)20 7269 4625
IA press office: [email protected]
T: 020 7269 4696
About the Investment Association (IA):
- The IA champions UK asset management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the asset management industry supports 115,000 jobs across the UK.
- Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
- Our purpose is to ensure investment managers are in the best possible position to:
- Build people’s resilience to financial adversity
- Help people achieve their financial aspirations
- Enable people to maintain a decent standard of living as they grow older
- Contribute to economic growth through the efficient allocation of capital.
- The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
- The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.