Investment firm makes bold decision that could impact billions of dollars in assets: 'We are thrilled'

M&G Investments has taken a strong step for the environment, announcing its adoption of a new "Sustainability Improvers" label.

According to ESG Today, the global investment manager will adopt the label as part of a system that was designed by the United Kingdom's Financial Conduct Authority as a way to hold corporations to account and prevent greenwashing.

The FCA's Sustainability Disclosure Requirements function so that only investors and corporations that satisfy the criteria for and adopt one of the FCA's four labels are allowed to use sustainability-related terms in marketing and product names.

The Sustainability Improvers label requires that a company is "investing in assets that have the potential to improve environmental and/or social sustainability." The three additional labels include Sustainability Focus, Sustainability Impact, and Sustainability Mixed Goals.

Companies adopting these labels must invest at least 70% of their assets into projects that align with the label's objective.

Regulations like the SDR can be a tool for helping to prevent investors from leveraging greenwashing tactics to appear more sustainable than they truly are.

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The world is moving toward a cleaner economy, and it has never been a better time for corporations to shift their investments away from planet-harming projects to opportunities like clean energy and sustainability-focused businesses. These investments have the potential to strengthen the market, create new jobs, lower the cost of energy, and increase the standard of living.

Environmental, social, and governance standards, such as the SDR, are imperfect and have faced blowback in the past for actually perpetuating greenwashing despite being set up to prevent it. However, working to keep corporations and investments transparent might just help to build greater momentum for greener investments.

The world's leading utility companies have pledged to invest over $116 billion a year in clean energy technology. And global spending on clean energy technologies is expected to be double that of spending on other energies.

"We are thrilled that our Paris Aligned Fund range is among the first of their type to have achieved the Sustainability Improvers label," John William Olsen, M&G Investments' Head of Sustain and Impact Equities, said, via ESG Today.