The Financial Conduct Authority (FCA) published a discussion paper (DP21/4) on the sustainability disclosure requirements for asset managers and regulated asset owners; the paper also covers a new classification and labeling system for sustainable investment products. DP21/4 seeks feedback on potential approaches to the design of sustainable investment labels, consumer-facing disclosures for investment products, and client- and consumer-facing entity- and product-level disclosures by asset managers and FCA-regulated asset owners. The feedback period will end on January 07, 2022, with the inputs informing the development of policy proposals that are expected in the second quarter of 2022.
The discussion paper forms part of the new environmental, social, and governance (ESG) strategy published by FCA. The strategy sets out the critical role of FCA in supporting the transition to a more sustainable economy, working with industry, listed companies, government, and international partners. Building trust and integrity in the market for ESG products and ensuring transparency are central to the strategy. As part of its strategy, FCA also underscores its commitment to continue embedding ESG considerations across its functions and expand its resources and capabilities in this area. FCA lays out how it will build on the existing work to achieve the ESG outcomes in its latest Business Plan and keep pace with the developments in this dynamic space. FCA will deliver its strategy across the following core themes:
- Promoting transparency on climate change and wider sustainability along the value chain
- Building trust and integrity in ESG-labeled instruments, products, and the supporting ecosystem
- Working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities, and impacts
- Supporting the role of finance in delivering a market-led transition to a more sustainable economy
- Developing strategies, organizational structures, resources and tools to support the integration of ESG into FCA activities
FCA also published the remarks of its CEO, Nikhil Rathi, on the new ESG strategy. Finally, FCA sets out the key findings from its Financial Lives 2020 survey and October 2020 COVID-19 panel survey. Financial Lives survey provides a wealth of information about consumer attitudes toward managing their money, the financial products they have, and their experiences of engaging with financial services firms. To test how the pandemic had already affected UK consumers, FCA ran the COVID-19 panel survey in October 2020, with over 22,000 respondents. FCA will use future research and analysis—including the next Financial Lives survey—to understand the changing shape of consumers’ financial lives after the pandemic.
Comment Due Date: January 07, 2022
Keywords: Europe, UK, Securities, ESG, Climate Change Risk, Sustainable Finance, Transition Risk, COVID-19, Disclosures, FCA
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Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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