First investment trusts with sustainability labels now displayed on AIC website
Four investment trusts have adopted the new labels.
Four investment trusts have become the first to adopt sustainability labels and display them on the Association of Investment Companies (AIC) website. Investors can now see at a glance which funds are committed to complying with strict new sustainability standards introduced last year by the Financial Conduct Authority (FCA).
The FCA’s Sustainability Disclosure Requirements (SDR) aim to make it easier for investors to identify genuinely sustainable investments and avoid greenwashing – where funds might make misleading claims about their “green” credentials. It comes as the AIC’s ESG Attitudes Tracker showed that 61% of investors did not trust claims made by sustainable investment funds.
Now, four trusts have stepped up to claim their label to help bolster confidence in their investment processes.
Investment trusts with sustainability labels
Trust | AIC sector | Sustainability label |
|---|---|---|
Renewable Energy Infrastructure | Sustainability Focus | |
Environmental | Sustainability Impact | |
Flexible Investment | Sustainability Impact | |
Renewable Energy Infrastructure | Sustainability Impact |
Source: theaic.co.uk
We know some of our non-UK members are looking carefully at the labelling regime with a view to meeting equivalent standards and potentially applying for labels once they are brought into scope.
Nick Britton, Research Director at the Association of Investment Companies (AIC)
Greencoat UK Wind has claimed the Sustainability Focus label, which describes funds with at least 70% invested in assets that are socially and/or environmentally sustainable.
The other three trusts, Schroder BSC Social Impact Trust, Impax Environmental Markets and VH Global Energy Infrastructure have all adopted the Sustainability Impact label. This label is for trusts with more than 70% invested with the aim of achieving a pre-defined environmental and/or social impact. Crucially, that impact must be measurable so that it can be proven.
Nick Britton, Research Director at the Association of Investment Companies (AIC), said: “Before any investment trusts can display a label, they must update and approve all of their ESG information published on our website. Investors can be confident that this information is accurate and up to date.
“At the moment, non-UK investment companies, such as Guernsey and Jersey companies, are outside the scope of the labelling regime. We know some of our non-UK members are looking carefully at the labelling regime with a view to meeting equivalent standards and potentially applying for labels once they are brought into scope.”
We contacted the managers of the four trusts to ask them more about why they adopted the labels. Their responses are collated below.
Why did you adopt a label?
Stephen Lilley, Investment Manager of Greencoat UK Wind, said: “We decided to adopt a label to reflect what the company’s investment objective is, and has been since inception. The company is aligned to a sustainability objective of generating renewable electricity through investing in operating UK wind farms, thereby contributing to climate change mitigation through the avoidance of carbon emissions.”
Eleanor Fraser-Smith, Head of Sustainability at Victory Hill Capital Partners, the manager of VH Global Energy Infrastructure, said: “The investments in sustainable energy infrastructure seek to make an impact by supporting the attainment of key sustainable development goals, where energy and energy infrastructure investments are a direct contributor to the acceleration of the energy transition.
“Adopting a label was therefore a natural extension to the fund strategy. It provides investors with transparent and measurable information on our processes and impact so they can be confident their capital is being deployed in alignment with the sustainability goals. It supports our communication of progress and impact and provides clear accountability.”
Anna O'Donoghue, Global Head of Product Development and Governance at Schroders, which co-manages Schroder BSC Social Impact Trust, said: “We firmly believe in the integrity and robustness of our wider sustainable and impact investment approach. Adopting the SDR label will add clarity for our clients, ensuring they understand the positive impact of their investments and helping them meet their sustainable investment objectives.”
Glen Suarez, Chairman of Impax Environmental Markets, said: "We are delighted to have adopted the Sustainability Impact label. We believe it provides a clear signpost for investors seeking exposure to the long-term structural growth potential of environmental markets. The board has confidence in these themes, and in our trust these are combined with a rigorous, financially focused investment process.
“In an evolving area of regulation, we have worked hard with our investment manager to review the requirements. Thanks to the manager’s rigorous approach, there will be no change to the investment process and the board continues to believe that this can deliver superior risk-adjusted returns over the long term.”
What sustainability attributes of the trust are you most proud of?
Hermina Popa, Portfolio Manager of Schroders BSC Social Impact Trust and Managing Director of Better Society Capital, said: “The Social Impact Trust remains deeply committed to making investments targeting the reduction of poverty and inequality.
“We are proud to have helped positively impact thousands of people while delivering over £200 million in benefits for the public through savings to government and households since inception. We look forward to continuing our work delivering measurable social impact for disadvantaged people across the UK.”
Glen Suarez, Chairman of Impax Environmental Markets, said: “We have been measuring the positive impacts of the trust’s holdings for over a decade. Moreover, rather than targeting a specific outcome, these sustainability characteristics are the natural result of a financially focused investment process.
“The company seeks to deliver market-beating returns over the long term, from businesses providing innovative solutions to environmental challenges to improving resource efficiency. Rather than limiting the manager’s opportunities, this creates an intrinsic link between environmental impact and financial return.”
Eleanor Fraser-Smith, Head of Sustainability at Victory Hill Capital Partners, the manager of VH Global Energy Infrastructure, said: “Our investment process starts with sustainability. The unique strategy aims to address structural demand gaps in target markets that support the energy transition with measurable impact.
“Since the 2021 IPO, we are proud to have invested in, and built, a diversified portfolio of 36 sustainable infrastructure assets across seven countries deploying six different technologies. These investments support those markets’ energy transition aims and have produced measurable impact through generating renewable and low carbon energy and displacing harmful emissions.”
Stephen Lilley, Investment Manager of Greencoat UK Wind, said: “As the investment manager, we ensure all investments made by the company play a significant role in supporting the decarbonisation of the energy system in the UK. In 2024 the company’s wind assets generated around 2% of the UK’s total electricity, contributing materially to renewable electricity generation in the UK.”
Useful links
ESG and investment trusts (includes jargon buster)
To view ESG information on an investment trust, click on the “ESG” tab on that investment trust’s profile page (example)
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