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Early insight into FCA's approach to Sustainable Finance

It’s Good Money Week 2022 and while the FCA had expected to have already published its thinking on sustainable finance, the national period of morning impacted the release date to 19th October onwards.

However, the FCA has been using its platform at Good Money Week to share some key messages that give insight into the direction of travel ahead of the publication.

Mark Manning, Technical Specialist in the FCA's Sustainable Finance and Stewardship department, drew a picture of an inclusive approach to the regime for sustainable finance.

The soon-to-be-published labelling and disclosure regimes will accommodate products that are on the transition path as well as those that have reached their destination:

“It's not for the regulator to say a product can only be sustainable if it is doing X. That’s not the regulator's role.” Mark Manning, Technical Specialist in the FCA's Sustainable Finance and Stewardship department

So, we can expect an all-encompassing regime from the regulator, that will allow investors and their advisers to identify and compare a wide range of products across a spectrum of sustainability.

Manning also made it clear that product manufacturers will need to make it clear what they are not investing in and what the trade-offs in any investment policy are.

For example, a product with an environmental goal, will need to make it clear to investors where it must make choices that those with a social sustainability focus may not be comfortable with.

For those manufacturers subject to the European SFDR regime, this may see the similarity with the concept of double materiality, where manufacturers manage the actual and potential adverse impacts for their investment decisions on people, society and the environment.

Good Money Week is a UK Sustainable Investment and Finance Association (UKSIF) initiative that aims to help the public make good money choices through their banking, pensions and investments.

Adempi is proud to be a member of UKSIF - find out more here.

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