The first phase of the U.K.’s Sustainability Disclosure Requirements (SDR), known as the anti-greenwashing rule, comes into effect at the end-of-May and will be followed by a series of substantial measures aimed at improving the transparency and naming convention of sustainable investment funds.

It’s the most pivotal piece of legislation yet aimed at fostering environmental, social and governance considerations within the U.K. financial sector,  says Morningstar Sustainalytics Director of ESG Policy Research Arthur Carabia in a new paper.

Arthur Carabia – Director, ESG Policy Research, Morningstar Sustainalytics:

“The SDR is important because it will affect how sustainable funds are built and how they are sold to investors. With the implementation of the SDR’s consumer-facing disclosures, investors should hopefully be able to make more informed decisions about their sustainable investing options.”

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Carabia goes on to characterize the SDR as “overall less data prescriptive, but more comprehensive” than the EU’s Sustainable Finance Disclosure Regulation (SFDR). He describes the relative strength of the SDR as lying in its setting minimum standards for the use of sustainability-related terms in fund names. The new rules include anti-greenwashing measures, new sustainability labels for ESG funds, requirements for product information and client-facing ESG-related content.