New rules result in near absence of ‘sustainable’ passive funds

Investors in sustainable funds face higher fees for active management due to a lack of affordable passive options, following the UK’s new anti-greenwashing rules mandating specific sustainability labels for funds. Currently, only eight passive funds meet these criteria, while 94 active funds have adopted the labels, significantly increasing costs for investors. Analysts express concern over the stringent requirements set by the FCA, which make it challenging for passive funds to qualify, leading to confusion and limiting the availability of sustainable investment choices.