Baillie Gifford Positive Change Fund is adopting the Sustainability Impact label
From 2 December 2024, Baillie Gifford Positive Change Fund is adopting the Sustainability Impact label, one of four sustainable investment labels under the FCA (Financial Conduct Authority) SDR (Sustainability Disclosure Requirements).
The Sustainability Impact label is for funds that invest mainly in solutions to sustainability problems, with an aim to achieve a positive impact for people or the planet. Baillie Gifford believes this best represents the way the Fund is managed, and its sustainability aims.
Some changes have been made to the Fund’s investment objectives and policy, and other related changes to the Fund’s prospectus and documents published in relation to the Fund, to comply with the SDR. The amended sustainability objective is intended to result in more detail on the impact themes and real-world outcomes that the Fund is aiming to achieve. Baillie Gifford has also included a reference to the Fund’s Theory of Change (which is a description of how and why a desired change is expected to occur in a particular context). The existing financial investment objective of the Fund is not changing.
A new requirement has been added meaning that at least 90% of the total value of the Fund’s assets will be invested in accordance with the amended sustainability objective. As at the date of publication, the Fund already meets this requirement, so no changes will be made to the portfolio as a result of this new requirement.
The investment policy will now explain how the Fund’s Theory of Change (how and why change is expected to occur) drives investment decision making and what contribution the investment adviser makes to achieving impact. It also includes some clarificatory changes to the wording of the Fund’s existing weapons exclusion and formalizes the existing commitment to align the portfolio to the goal of net zero greenhouse gas emissions by 2050 or sooner in line with global efforts to limit warming to 1.5C (‘net zero’).
The changes will not affect the way Baillie Gifford manage the Fund (apart from ensuring that at least 90% of its assets are invested in line with the sustainability objective), its risk profile, its financial objective (the Fund will continue to aim to outperform (after costs) the MSCI ACWI Index, in sterling, by at least 2% per annum over rolling five-year periods), what the Fund can invest in, or what it is currently invested in.
In line with the regulatory requirements, Baillie Gifford has produced a Consumer Facing Disclosure (CFD) document which provides you with information on the fund’s sustainability goals, sustainability approach and key metrics showing progress towards meeting the Fund’s sustainability objective. This can be viewed on our website here.
The SDR regime, which came into force on 31st July this year, allows asset managers to apply to use one of four distinct labels to denote a fund’s sustainable investment credentials. Please note that labels are for use by UK domiciled funds only, are optional and not compulsory, and ethical/responsible strategies are not in scope.
To adopt a label, as specified in the FCA rules, the asset manager must set out the sustainability objectives of a fund i.e. what it is trying to achieve and how it intends to meet these objectives, and ensure they meet the qualifying criteria on an ongoing basis.
The aim of the labels is to help individuals navigate the sustainable investment market and identify which funds are best aligned to their preferences. In addition, anti-greenwashing rules (to ensure sustainability-related claims must be fair, clear and not misleading) reinforce the FCA’s clear intention that financial products marketed as sustainable should do as they claim and have the evidence to back it up.
The Big Exchange welcomes the SDR labels which we believe complement our own methodology for assessing funds. TBE’s investment ethos is to follow the Sustainable Development Goals (SDGs) developed by the United Nations. You can read more about our methodology and process here. Although the labels are not currently applicable to the overseas funds we offer, consultations are under way to potentially bring them in scope in the future.
You can read more about the rules and who they apply to here.
Please remember that when investing, making money is not guaranteed and your capital is at risk. The value of your fund can go down as well as up. Tax treatment depends on an individual’s circumstances and may be subject to change.
This communication does not constitute investment advice. If you are unsure whether an investment is suitable for your circumstances, you should contact an independent financial advisor.
The Big Exchange (TBF) Limited is a wholly owned subsidiary of The Big Exchange Limited. The Big Exchange (TBF) Limited is an Appointed Representative of Resolution Compliance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 574048). (CaRA: 8815)
