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Standard Life invests in labelled pension funds under SDR regime

Standard Life is integrating the new labelling regime to help investors and savers better understand a fund’s sustainability objectives.
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Standard Life is integrating the new labelling regime introduced by the Financial Conduct Authority (FCA) to help investors and savers better understand a pension fund’s sustainability objectives.

This effort aligns with the FCA’s new Sustainability Disclosure Requirements (SDR), which aim to promote integrity and transparency in sustainable investing.

As part of this initiative, Standard Life plans to enhance its primary default investment solution, Sustainable Multi Asset, by incorporating equity and fixed income allocations through eight PUTM funds that have adopted the Sustainability Improvers label.

The changes were intended to strengthen Standard Life’s sustainable investment approach, which supports more than two million pension savers.

Implementation is expected in early 2025, with over 75% of Sustainable Multi Asset investments set to align with a formal objective to transition to net zero by 2050, in compliance with new regulatory thresholds.

The inclusion of listed equity and fixed income funds is designed to benefit both younger and older pension scheme members.

Using Sustainability Improvers-labelled funds also paves the way for potential enhancements to Standard Life’s Future Advantage and Investment Pathways solutions.

Callum Stewart, head of Investment Proposition Development at Standard Life, commented: “The inclusion of sustainability labelled funds in our proposition is a significant milestone and underlines our commitment to improving outcomes for members, as we lead our sector’s transition to more sustainable investment solutions.

“We committed to a sustainable investment philosophy when transitioning 1.5 million customers to sustainable strategies between 2020 and 2022, and now believe we are the first pension provider to embrace the new regulatory framework in advance of it becoming a requirement for pension funds.

“This development helps future proof our solutions by embedding a verified sustainability approach to improve financial outcomes for members.”

Sindhu Krishna, chief sustainable investment officer at Phoenix Group, added: “Alongside our customers, we know that the impacts of climate change need to be addressed to optimise returns.

“The new FCA labelling regime brings integrity to the market and aims to bring more transparency and information to customers.

“This will enable a better understanding in how funds are investing in companies with a credible path to reach net-zero by 2050.”

To secure the new labelling, Standard Life collaborated with colleagues across the wider Phoenix Group, leveraging their expertise and incorporating the FTSE Phoenix Climate Aware Index series.

Under the SDR fund labelling requirements, members will receive clear and straightforward information, including the sustainability goal of the fund, the approach used to achieve this goal, and an annual update on progress.

By utilising PUTM Sustainability Improvers-labelled funds, Standard Life intends to primarily invest in transitioning companies, supporting the management of climate risks and opportunities to achieve net zero by 2050 on behalf of its members.

This strategy will be complemented by an aligned stewardship approach.

Additionally, Standard Life’s customised index methodology integrates climate transition goals with forward-looking insights, including those from the Transition Pathway Initiative.

By adopting this approach, the company aims to improve long-term financial outcomes for members and enhance transparency as it transitions to the new regulatory disclosures.

Zarah Choudhary

Zarah Choudhary is a Reporter for Workplace Journal and The Intermediary

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