FCA seeks views on ESG investment criteria
The City regulator is seeking views on potential criteria to classify and label environmental, social and governance (ESG) investment products to help investors make more informed investment decisions.
The Financial Conduct Authority (FCA) published a discussion paper coinciding with COP26 Finance Day, to gather views and help consumers navigate their sustainability characteristics.
The FCA is also after feedback on supporting entity-level and product-level disclosures and will leverage existing initiatives in this area to ensure coherence with market practice and other regulation.
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The input received will guide the FCA’s policy design in this area, ahead of a consultation on new proposals in Spring 2022.
The discussion paper forms part of the FCA’s new ESG strategy, which was released today.
The strategy sets out the FCA’s role in supporting the transition to a more sustainable economy, working with industry, listed companies and international partners.
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The key themes of the strategy are: promoting transparency on climate change and wider sustainability along the value chain; building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem; and developing strategies and tools to support the integration of ESG into FCA activities.
The FCA is also focused on working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts and supporting the role of finance in delivering a market-led transition to a more sustainable economy.
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“It is vital that we innovate to support industry’s shift to a more sustainable future,” said Nikhil Rathi, chief executive of the FCA.
“That is why the FCA has been leading from the front.
“Developing consistent, trusted standards are a vital part of that, giving investors the confidence to put their money where it can deliver the most sustainable outcome.
“The strategy we have published today puts these standards front and centre, supported by supervision and enforcement where firms fail to meet them.”
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Earlier this year, the City regulator found that 80 per cent of investors wanted to do “some good with their money” while earning a financial return, 71 per cent wanted to “invest in a way that is protecting the environment” and 71 per cent would not put their money into “investments which are unethical”.
The FCA has requested comments on the discussion paper by Friday 7 January 2022.
