The growing demand for sustainable finance has transformed the investment landscape, but it has also introduced new challenges, particularly around transparency and accountability.

Amid concerns about the misrepresentation of sustainability credentials, the newly published PAS 7342:2025 Sustainable investment funds – design, implementation, monitoring and communication of sustainability attributes – Specification offers a much-needed framework of good practice.

This standard is the latest in a suite of sustainable finance initiatives sponsored jointly by industry and the Department for Energy Security and Net Zero (DESNZ).

PAS 7342 sets out clear requirements for fund managers to design, manage, and communicate sustainable investment funds responsibly, providing critical tools to ensure funds align with their stated objectives and maintain investor confidence.

The growing importance of standards in sustainable finance

The rapid growth of sustainable investments, driven by heightened awareness of ESG issues and net-zero goals, has underscored the need for robust standards to ensure transparency and accountability.

Greenwashing has emerged as a significant problem, prompting regulators like the Financial Conduct Authority (FCA) to introduce frameworks such as the Sustainability Disclosure Requirements (SDR) and investment labels.

The PAS is designed to complement SDR but places a greater emphasis on the building blocks and practicalities of investing sustainably.  This includes directing fund managers to convey the changeable nature of investing, and to document - in ‘sustainability policy’ information – the ‘issues’ a fund considers, and the ‘approaches’ the fund employs.

Learn more about how standards are supporting financial services organizations here.

What PAS 7342 covers

Building on earlier standards like PAS 7340 (now BS ISO 32210) and PAS 7341, PAS 7342 applies to individual funds, whether they involve single-asset investments, multi-asset portfolios, or fund-of-fund structures.

Key areas covered in it include:

• Designing sustainable investment strategies

Requirements for creating and documenting strategies, objectives, policies and approaches, including the naming of funds and alignment with stated sustainability objectives.

• Communicating intent and outcomes

Clear articulation of a fund’s aims, objectives, and intended impacts, with transparency around the policies guiding investment decisions.

• Governance and monitoring

Emphasis on robust governance processes for investment selection, stewardship activities, and ongoing monitoring to ensure alignment with sustainability claims.

•  Verification and labelling

Guidance on assembling evidence and demonstrating the validity of sustainability-related claims, aiding in the selection, categorization and labelling of funds.

•  Intermediary and investor communication

Tools for fund managers to demonstrate to financial advisers, portfolio managers, and investors that a fund meets its published sustainability criteria, along with protocols for addressing queries and complaints.

Who should use the new PAS 7342 fund standard?

PAS 7342 is designed primarily for fund managers but is also highly relevant to the broader investment ecosystem, including:

• Financial intermediaries: Wealth managers, portfolio planners, and independent financial advisers can use the standard to assess and represent sustainable funds accurately.

• Regulators and policymakers: Provides a benchmark for what good practice looks like.

• Investors: Offers insights into what they should expect from sustainable funds, helping them make informed decisions and align their investments with their values.

What are the benefits of sustainable fund PAS 7342?

PAS 7342 benefits include:

• Combating greenwashing: PAS 7342 provides clear guidance on how sustainable funds should align their practices with their advertised strategies, reducing the risk of misleading claims.

• Enhanced transparency: The standard ensures that investors and intermediaries have access to reliable information about a fund’s sustainability objectives, governance, and outcomes.

• Building investor confidence: By establishing industry-wide good practice, PAS 7342 fosters trust in sustainable investment products, encouraging greater participation from retail and institutional investors.

• Supporting regulatory alignment: Complementing the Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements, the standard is consistent with regulatory frameworks and offers clear guidance in relation to sustainable investments.

• Encouraging innovation: The non-prescriptive nature of the standard encourages fund managers to explore new and innovative approaches to sustainability, while adhering to a clear framework for transparency and accountability.

Download PAS 7342 today and gain the tools to design, implement, and communicate sustainable investment strategies with confidence.

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