The UK’s Sustainability Disclosure Requirements set rigorous standards aimed at curbing greenwashing, standardising sustainable investment and promoting responsible capital allocation.
The Financial Conduct Authority is regulating the SDR. The regime offers opportunities to investors and fund managers in the sustainable investment space. The Sustainability Labels will help to assist investors in understanding a product’s sustainability focus and goals. Enhanced disclosure standards should ensure that investors have access to accurate and comparable sustainability data.
Meeting the SDR requirements is not, however, a straightforward process. Regulation and deadlines are prone to change, with SDR serving as a good example. The deadline for complying with the regime was postponed from December 2024 to April 2025.
This uncertainty requires agile solutions and constant monitoring. Complicated data requirements, meanwhile, are straining managers’ internal resources. Advisers are generating hefty fees from managers that do not want to fall foul of the FCA.
Adhering to SDR is therefore an expensive business. The total-estimated one-off costs of SDR compliance are £181.1m, according to the Financial Conduct Authority, while ongoing annual costs sit at £34.2m. Legal, training and IT costs all fit into this new expense for asset managers.
But technology can help fund managers meet their SDR requirements more efficiently. Automation may hold the answer. In March, Maanch will launch a pilot programme that will look to ease the reporting burden of SDR by automating key compliance processes. We plan to streamline the SDR reporting process by leveraging data and market-leading technology.
Maanch SDR Pilot will involve four phases:
1. User research
Maanch will engage with labelled fund managers to understand their specific SDR reporting requirements. We will use the pilot to identify managers’ current pain points and workflow gaps. Armed with these insights, we will prioritise solutions for the fund management industry.
2. Develop and Prototype
Maanch will build core functionalities into its software that will automate SDR compliance. We will also generate data-driven insights for real-time monitoring and transparent reporting.
3. Pilot the Solution
We will test the product with select funds in order to provide its usability and validate its performance. Maanch will continue to refine the pilot’s features through regular feedback, ensuring that users are at the heart of any improvements.
4. Offer Ongoing Support
Our customers can rely on us to provide ongoing support for any aspect of our software. Throughout this pilot, we will provide training and guidance to clients. We will continue to adapt swiftly to evolving regulations and measure key performance metrics.
How the SDR Pilot will Transform Stewardship
The pilot will help asset managers strengthen their engagement strategies and measures for accountability. The availability of real-time ESG data will help to encourage quicker decision-making. Transparent and consistent reporting, along with reduced greenwashing risks, will deepen trust between stakeholders.
Early SDR compliance may help fund managers to stand out in a competitive market that demands tight cost control. Technology, and specifically automation, stand to save investment teams both the time and expense of adhering to challenging regulation.
By embracing automation, fund managers can turn SDR compliance from a costly obligation into a competitive advantage. Join our pilot program to experience firsthand how technology can transform stewardship in sustainable investing. You can register your interest here.
If you would like a demonstration of the Maanch Engagement Tracker, please book an introduction with our founder and chief executive officer Darshita Gillies via this link.
