UKSIF warns elements of sustainable disclosure requirements ‘unworkable’

An 'unexpected disclosure' element of the UK’s planned Sustainable Disclosure Requirements (SDR) are “broadly unworkable” in their current drafting, according to James Alexander, chief executive of the UK Sustainable Investment and Finance Association (UKSIF).

With the SDR, there are seven categories of disclosures, including a so-called 'unexpected' stipulation, which are 'types of holdings that the firm would reasonably expect consumers of the product to find surprising', or inconsistent with the sustainability objective. 

Firms will be required to identify such holdings and explain why they have been selected.

Alexander said: “The ‘unexpected disclosures’ component of SDR is broadly unworkable in its current drafting, which is a shame because I think the principles are very sensible." 

He explained: "There are obviously existing rules in terms of disclosing assets that make up a certain proportion of a fund. But investors would regard the exact makeup of their funds as being part of their commercial confidential information. Obviously there's a line to be drawn there.”

Across the pond

Speaking at a media briefing session hosted by UKSIF and ShareAction, Alexander also commented on the US Inflation Reduction Act (IRA), and the massive amount of green investment that has accordingly shifted towards the nation.

“We are hearing anecdotally some companies saying there’s capital moving to the US and investments moving to the US, and the government in the UK still thinks that we're 10 years ahead of the US." 

He stressed: "We are not necessarily in a position of being ahead of the US and we absolutely need to make sure that we are responding urgently to [the IRA].”

Earlier this year, Alexander told Net Zero Investor that some of his members had “time and again” reported a trend of investment beginning to cross the Atlantic as a result of the “era-defining” IRA.