The UK government has issued a new set of sustainable finance standards for investment managers.

The new voluntary UK standard, PAS 7341:2020, sets out the requirements to establish, implement and manage the process of integrating responsible and sustainable considerations into investment management.

It has been laid out by the national standards body, the BSI, in collaboration with the Department for Business, Energy and Industrial Strategy (BEIS) and the UK financial services industry.

The standard aims to support firms in their transition over time towards sustainable investment management and will enable them to better align with global initiatives including the United Nation’s Sustainable Development Goals (UN SDGs) and the Paris Climate Agreement.

It also includes stewardship and the levels of engagement needed to demonstrate ongoing practices and commitment to responsible or sustainable investment management.

Scott Steedman, director of standards at BSI, said the new standard creates a way for financial management organisations to transition from responsible to sustainable investment management.

“The financial system is playing a crucial role in helping to rebuild a more sustainable future through responsible economic growth. This is the first consensus for delivering responsible investment management at corporate level,” he said.

With investors increasingly pouring money into ESG funds, there is clearly a growing need for clarity over standards and governance.

Ethical funds are on course to have a record-breaking year in terms of retail fund sales.

Figures from the Investment Association show nearly £4bn has already been invested in ethical funds this year, compared to £3.2bn in 2019.

The standard builds on the BSI’s first output published earlier this year, which provides details of how organisations can develop and maximise opportunities that address sustainability challenges.

Its launch coincides with the UK preparing to assume the G7 presidency and host next year’s UN Climate Change Conference.

Kwasi Kwarteng, minister of state for business, energy and clean growth, said: “Transforming our financial system for a greener future is crucial as we build back better from Covid-19 and to meet our legally binding target for net zero carbon emissions by 2050.

“Building on our pioneering Green Finance Strategy, this new standard will help the UK investment sector become even more sustainable as we strive to lead the world in tackling climate change.”