BSI Sustainable Funds PAS 7342 – now available for public comment
Posted on: May 29th, 2024
Having spent a great deal of time on this over the last 18 months I am delighted to announce that yesterday saw the launch of the draft British Standards Institution’s sustainable funds PAS 7342 document – and the start of a public consultation period that ends on 21 June.
What is PAS 7342?
This ‘consultation’ version of PAS 7342 is a draft specification for retail sustainable investment funds, designed to help describe what ‘good’ looks like.
This PAS compliments and builds on, but does not replicate, SDR – as it is ‘taken as given’ that regulatory requirements will be adhered to – and rules vary in different jurisdictions. (Standards and documents of this kind are designed to work internationally.)
PAS 7342 is the final part of a three part series of documents that have been launched in recent years – the previous paper focused on responsible investment (PAS 7341).
Who was involved in creating PAS 7342?
As you would expect, this detailed (40 page) document was very much a team effort. It was shaped and reviewed by an expert committee – as well as the BSI team – with us all collaborating to design and improve the content over what turned out to be a quite an interesting (and changeable!) time for retail sustainable funds.
The PAS was financed by a combination of industry sponsors and UK government – DESNZ – hence the many references to climate change.
I agreed to become the technical author of this document in late 2022, having previously been on the steering group, because it was clear many fund managers would need help with the design and communication of sustainable fund strategies (and the BSI needed an experienced industry expert to help break the back of the project).
Why respond?
The PAS (and development of sustainable investment standards generally) has been a long time coming. I am biased, but firmly believe that this work is important because it will help guide (and I hope improve!) the development, management and communication of sustainable funds in future.
This is however a complex area – and opinions vary…
As a result it is important that the BSI receives as much feedback as possible, so please respond to the consultation if you can!
How to respond to the consultation
The BSI website, which will require you to log in, has links to the document and feedback fields. You can access the PAS here. Responses must be received by 21 June 2024.
The landing page explanatory text on the BSI website explains further – as follows:
PAS 7342:2024 Product fund – Assessment, monitoring, labelling and communication of sustainable investment funds – Specification
- Comment period start date:
- Comment period end date:
Scope
This PAS specifies requirements for the assessment, governance, documentation and communication of sustainable funds.
NOTE This relates to individual funds whether investment is held in a single asset type, multi-asset or portfolio of funds, unless indicated otherwise.
It covers requirements on the processes by which a fund is presented to the market, including:
– the documentation and implementation of sustainable investment strategies, including the naming of such strategies;
– communicating sustainable and related responsible investment-specific aims, objectives, outcomes and intentionality (e.g. explanation of the policies that influence investment selection decisions, intended impacts, outcomes, published fund objectives or other stated aims);
– communication of sustainable and related responsible investment-specific elements of the investment decision making and management process, including (but not restricted to) investment selection, stewardship activity, governance and ongoing monitoring;
– demonstrating governance of investment selection, management and review processes, including screening, asset selection and responsible ownership processes; and
– aiding the verification of sustainability-related elements of fund strategies, categorization and labelling.
It also covers requirements for the fund manager on how to:
– demonstrate to intermediaries (e.g. financial advisers and portfolio managers) and individual investors that a fund meets its published sustainability objectives and criteria; and
– respond to sustainable investment enquiries and complaints.
This PAS does not cover the accuracy of fund information and any supporting documents provided by fund managers, or how the validity of that information is to be assessed by potential investors.
This PAS is intended for use by fund managers, and might also be of interest to a range of intermediaries, including discretionary managers, wealth managers, portfolio planners, independent financial advisers, fund platforms and both retail and institutional investors.
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