In other words, if the companies invest in renewable energy as well.
Over the past 12 months, this has gone up from 54 per cent to 59 per cent, confirming an increase in overall acceptance of the place of such companies in a sustainable fund.
Claudia Quiroz, head of sustainable investment at Quilter Cheviot and manager of the Climate Assets fund range, says the industry has got to a point with sustainable investment where considering and integrating ESG factors is a given.
Additionally, investors expect these funds to have ESG factor considerations well integrated into the investment process; for instance understating how the business operates when it comes to employee policies such as equal pay, diversity or union representation.
"We also expect companies to integrate ESG factors across the value chain", notes Quiroz.
She adds: “Sustainable funds tend to have a capital growth objective as well as an environmental or social aim – this will vary from fund to fund.
“As a result, investors in sustainability funds will naturally care about the impact or the change that companies these funds invest in are making on society either from an environmental viewpoint or helping to reduce social inequalities around income, water access and healthcare, for example.
“These themes resonate in today’s day and age, and as such, while returns remain very important and the opportunity set is growing, it is not the be all and end all."
Overall, managers believe SDR will improve the clarity and disclosure of the sustainability objectives, and ensure that sustainability funds are aligned to investors' values and expectations.
Ima Jackson-Obot is deputy features editor at FT Adviser
