SDR in Practice: What we've learned from 30 Financial institutions

The scope of SDR implementation

Our analysis covers 30 funds that have published both Consumer-facing Disclosure (CFD) and Pre-contractual Disclosure documents. These funds represent a diverse range of sustainability approaches, including 8 "Focus" funds, 4 "Improvers" funds, 2 "Mixed Goals" funds, 8 "Impact" funds, and 8 unlabelled funds with Environmental/Social characteristics.

Key findings

Fund naming and categorization

Nearly all funds (97%) incorporate ESG terminology in their names, with "Sustainable" being the preferred term.

Compliance vs. Ambition

While 100% of labelled funds meet the crucial 70% asset alignment threshold, most (63%) don't exceed this minimum requirement. This pattern suggests a compliance-focused approach rather than ambitious sustainability leadership. "Improvers" and "Mixed Goals" funds face particular challenges in surpassing this threshold.

ESG strategies

Exclusion remains the dominant approach, with 97% of funds employing exclusion strategies covering an average of 8 sectors or activities. ESG scoring is also prevalent (74.4%), with most using proprietary methodologies. However, only 10% mention universe reduction based on ESG criteria, indicating a preference for flexible implementation.

Stewardship practices

Stewardship emerges as central to the SDR framework, with 93% of funds defining escalation policies. However, only one fund describes a complete escalation process that includes voting measures, rating downgrades, position adjustments, and divestment. "Improvers" funds show particularly strong stewardship practices.

Sustainability goals and metrics

Although mentioning an average of 5 to 6 metrics, 7 funds have not disclosed any quantitative indicators. Environmental indicators are largely dominant (96% of funds), while social aspects take a back seat. Also, financial actors do not seem to use other reporting frameworks (PAIs, TCFD) for indicators. There is a critical lack of methodological transparency, with only 6 funds citing their data sources and only 4 funds have informed the coverage of the data. These practices significantly limit the relevance and comparability of information for investors.

Transparency gaps

Significant transparency gaps persist: only 20% of funds include dedicated sections on ESG resources and governance, few provide information on data coverage. Additionally, 63% 37% cross-reference to financial documents.

Find the infographic of our study below.