To coincide with COP26 Finance Day the FCA recently published a Discussion Paper on Sustainability Disclosure Requirements and Investment Labels to invite views on the potential criteria needed to help classify and label investment products. The aim is to help consumers understand the sustainability of their investments, in addition to the opportunities and risks.
The Discussion Paper follows the publication of the Government’s Roadmap to Sustainable Investing on 18 October 2021. The roadmap set out the Government’s ambitions for new economy-wide sustainability disclosures that enable every financial decision to factor in climate change and the environment.
In a recent survey the FCA found 80% of respondents wanted their money to ‘do some good’ whilst 71% stated they wanted to ‘invest in a way that is protecting the environment’. Consumers, industry participants, civil society, regulators and the media however are increasingly questioning the integrity of some of the ‘green’ claims made by companies and financial firms, so in order to bring out positive change within the financial sector it is clear consumers need high quality information and clear standards.
Nikhil Rathi, Chief Executive of the FCA commented:
'It is vital that we innovate to support industry’s shift to a more sustainable future. 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 Discussion Paper forms part of the FCA’s new ESG Strategy detailing the regulator's role in supporting the transition to a more sustainable economy. 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 has requested comments on the Discussion Paper by Friday 7 January 2022.
Read Nikhil Rathi's ESG Strategy Speech here - https://www.fca.org.uk/news/speeches/strategy-positive-sustainable-change