A regular audio briefing for the alternative asset management industry - Issue 40.Earlier this month, the FCA, the UK regulator, announced that its consultation on a sustainability disclosure and labelling regime for asset managers and regulated asset owners would be delayed until the autumn. While it is clearly important to take the time needed to get these complex rules right, many firms will be disappointed by the delay. They have been waiting to see what the UK's equivalent of the EU's Sustainable Finance Disclosure Regulation (SFDR) will look like. The UK has made the right decision, confirmed in a discussion paper issued last year, to separate its sustainability disclosure rules from its proposed fund labels. Unlike the SFDR, the UK intends to lay down minimum standards for "green" investment products from the outset, so that investors can rely on the labels when making investment decisions. Some fund managers have welcomed the prospect of a specific "impact fund" label. If appropriately defined, an impact-specific label could be helpful in the fight against "impact-washing", and might give investors greater confidence that their investments will actually deliver positive outcomes. But coming up with an appropriate definition is not easy. Last month we hosted a webinar to debate how regulators should seek to define impact – and then, importantly, how to police it.To some investors, the EU SFDR's "Article 9" category looks like a proxy for an impact fund, but – as Finance Watch and other NGOs have pointed out – there are no objectively set minimum standards under Article 9. It is true that the regulatory guidance strongly suggests that all investments made by an Article 9 product must be categorised as "sustainable" by the fund manager (subject to very limited exceptions), but considerable doubt remains about the definition of a "sustainable investment" – and different firms are taking very different approaches. That means many true impact funds may conclude that they fail to qualify under Article 9, especially in light of a renewed focus on greenwashing risks. One issue is that the SFDR does not (yet) make clear whether transitional assets – for example, those that are in hard-to-abate sectors such as cement manufacturing – can qualify for inclusion in an Article 9 portfolio, nor whether it makes a difference if the activities concerned are, like cement production, eligible for alignment with the EU Green Taxonomy. For socially sustainable investments, firms don't even have a taxonomy to guide them, and are given considerable scope to determine which social outcomes qualify as "sustainable". (An EU social taxonomy is

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