Castlefield is taking a “wait and see” approach to adopting the FCA’s Sustainability Disclosure Requirements (SDR) labels for its funds.
This is what Castlefield head of stewardship Ita McMahon told Money Marketing, but the firm does “remain supportive of the labelling system”.
Castlefield is known as ‘The Thoughtful Investor’ as it believes in investing clients’ assets in a responsible and sustainable way.
Castlefield is renaming five of its funds as they have the term sustainable included in their name.
These five funds are:
- CFP Castlefield Sustainable UK Smaller Companies Fund
- CFP Castlefield Sustainable UK Opportunities Fund
- CFP Castlefield Sustainable European Fund
- CFP Castlefield Sustainable Portfolio Growth Fund
- CFP Castlefield Sustainable Portfolio Income Fund
Castlefield will now be changing the term sustainable in these funds to thoughtful, from 2 December.
Castlefield ‘The Thoughtful Investor’ was trademarked a few years ago.
McMahon explained that you cannot use the term sustainable or certain other terms unless you have a SDR label.
No Castlefield fund will adopt a SDR label for the time being.
In September 2024, the FCA extended the deadline by four months for firms to comply with new sustainability rules.
The regulator became aware that it has taken longer than expected for firms to make changes to their fund names.
As a result, it offered limited temporary flexibility until 5pm on 2 April 2025, for firms to comply with the naming and marketing rules.
The original deadline was 2 December.
An issue surrounding the label regime is that it requires a lot of data that is not always available, especially when it comes to funds that focus on smaller companies, McMahon added.
The SDR rules states that a fund can use sustainability-related terms in their marketing if they have sustainable characteristics.
However, if the fund does not have any sustainable objectives, then it cannot adopt a label. McMahon said: “We have never had a sustainable objective” and so “we are not applying for a label right now”.
But the firm is using sustainability-related terms in its marketing.
She added that what is “most important for us right now is that we get the best outcomes for our clients”.
“From a client’s perspective, the only thing that changes is the name of the fund, nothing else.”
Due to the fact that Castlefield can use sustainability-related terms in its marketing, it has had to create a document that “really helps its financial advisers”, the consumer-facing disclosure document.
If a firm has either the fund labels or marketing it must create this document.
McMahon said it must be “nice and short”, available on Castlefield’s website and allow investors to “compare funds at a glance as well”.
McMahon added that this is an example of how a firm can reap benefits of SDR without adopting a label.
She added: “Anything that improves understanding of any area of the industry is a good thing and we support that.
“I feel the aim of SDR is to improve retail investors understanding of these funds.”
McMahon said it will be reviewing the SDR matter on an ongoing basis.
Additionally, Castlefield did engage with the FCA on SDR.
Castlefield was originally established in 2002 in Manchester with the focus of financially looking after the charity sector.
It does still have charities on its books but is now a sustainable investment specialist.
At the same time as McMahon’s comments, M&G Investments announced that it intends to adopt the ‘Sustainability Impact’ label for the M&G Positive Impact fund in early 2025.
M&G said it has been a “pioneer in investing for impact within the listed equity space in the UK”, having launched the fund in 2018.
The fund is diversified across six main impact areas: climate action, pollution reduction, circular economy, health and wellbeing, education and innovation, and working conditions.
One of the main aim behind the SDR is to “improve the trust and transparency of sustainable investment products and minimise greenwashing”.
Greenwashing is defined as the act of “making people believe that your company is doing more to protect the environment than it really is”.
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