Investment fund sector adopts self-regulation standard for sustainability information

The Board of the Swedish Investment Fund Association has adopted a new standard for funds’ sustainability information. Compliance with the new standard, which meets the statutory sustainability information requirements that will come into force in the new year and makes it easy for fund savers to evaluate and compare funds’ sustainability work, is mandatory for all of the industry association’s members.

New legislation will come into force on 1 January 2018 mandating the inclusion of sustainability information in funds’ full prospectus and annual reports. The legislative requirement applies to all Swedish UCITS, irrespective of whether they are managed by a Swedish or foreign fund management company. The requirement also applies to Swedish and foreign alternative investment funds (AIFs) marketed to non-professional investors in Sweden. Every fund must provide information on the way in which the fund’s management operations address issues relating to the environment, social conditions, labour practices, respect for human rights, and anti-corruption work.

The Swedish Financial Supervisory Authority has decided not to exercise its authority to regulate the way in which funds’ sustainability information is presented, preferring instead to see self-regulation in this area. The Swedish Investment Fund Association has accordingly drawn up an industry standard designed to make it easier for fund management companies to comply with the statutory requirements in a way that enables savers to compare and evaluate the funds’ sustainability work.

“The Swedish investment fund sector has made considerable progress on sustainability issues. The sector has progressed these issues so successfully through the Swedish forum for sustainable investments (Swesif) network that we are now at a point where it is possible to legislate on sustainability information for funds. Indeed, many fund management companies have made so much progress that the new standard will, for them, constitute the basis when it comes to sustainability information and they will provide additional descriptions of and information on their methods and results. We are seeing such rapid progress in the sustainability sphere that the current standard will undoubtedly be revised and complemented over time,” says Fredrik Nordström, CEO of the Swedish Investment Fund Association.

The Swedish Investment Fund Association has elected to integrate the new sustainability guidelines into the “Guidelines for marketing and information by fund management companies” with which the Association’s members have already undertaken to comply. The guidelines use established sustainability concepts that reflect the investors’ perspective. The funds must report whether their management operations take environmental aspects, social aspects and corporate governance aspects into account, and must specify the methods they use. If the fund management company has stated that sustainability issues are taken into account in its management operations, it must subsequently also provide details of how the specified methods were applied during the year.

About the new legislation

  • A new statutory requirement governing sustainability information in funds’ full prospectus and annual reports (or in a separate report) comes into force on 1 January 2018.
  • The statutory requirement applies to Swedish UCITS, irrespective of whether they are managed by a Swedish or foreign fund management company. The requirement also applies to AP7, and to alternative investment funds (AIFs), whether Swedish or foreign, that are marketed to non-professional investors in Sweden.
  • All such funds shall “provide the information required to obtain an understanding of the fund’s management with regard to sustainability, including issues relating to the environment, social conditions, labour practices, respect for human rights, and anti-corruption work”. The fund’s full prospectus and annual report shall detail the sustainability aspects taken into account as part of the management operations and the method or methods used in the sustainability work.
  • The legislation also requires the funds to include a follow-up on the sustainability work in the fund’s annual report or in a separate report. The information must, furthermore, be available via the company’s website.

Annex: updated Guidelines for marketing and information by fund management companies

For further information, please contact:

Eva Reimers , Head of Communications, Swedish Investment Fund Association 
Tel. +46 8 506 988 06 / +46 70 644 31 70 /  eva.reimers@fondbolagen.se

Fredrik Nordström , CEO, Swedish Investment Fund Association
Tel. +46 8 506 988 01 / +46 70 219 35 20 /  fredrik.nordstrom@fondbolagen.se

The Swedish Investment Fund Association is an industry organisation with a mandate to protect and promote the common interests of fund savers and fund management companies. With its member companies, the Swedish Investment Fund Association represents the majority of fund-based saving in Sweden. The Association works to promote a sound industry that operates in the best interests of the savers. Satisfied fund savers are a prerequisite of a successful investment fund sector. 

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