On 23 April, the Financial Conduct Authority (“FCA”) published a new webpage containing various resources and information on the FCA’s strategic approach to sustainable finance and climate change.
The update follows the Chancellor’s March 2021 remit letter to the FCA which stated that the UK financial regulators should consider the UK government’s commitment to achieving a “net-zero economy by 2050” when advancing their objectives and discharging their regulatory functions.
The webpage highlights that the FCA’s sustainable finance strategy is based on three core themes mirroring the priorities set out in the FCA’s previous feedback statement FS19/6: Climate change and green finance:
- Transparency: “Promoting good disclosures along the investment chain”;
- Trust: “Ensuring that the market delivers sustainable finance instruments and products that genuinely meet investors’ sustainability preferences”; and
- Tools: “Government, regulators and industry all working together to share experience, develop guidance and tools, and provide mutual support as we address the challenges of climate change”.
The FCA’s new sustainable finance hub also directs towards regulatory initiatives such as:
- the UK’s Climate Financial Risk Forum, established in 2019 and co-chaired by the FCA and Prudential Regulation Authority;
- the FCA’s ongoing work on effective stewardship by asset owners and managers via publications such as PS19/13, PS19/30 and FS19/7, as well as its ongoing cooperation with the Financial Reporting Council on the topic;
- the UK TCFD Taskforce’s Interim Report and Roadmap published in 2020;
- the previous speech by Richard Monks, Director of Strategy, on “Building trust in sustainable investments” in November 2020 – which highlighted the FCA’s five potential “guiding principles” for firms around ESG product design and disclosure; and
- the FCA’s international work within initiatives such as the Sustainable Finance Taskforce of the International Organization of Securities Commissions (“IOSCO”).
We aim to make sure that our regulatory approach creates an environment in which market participants can manage the risks from moving to a more sustainable economy and capture opportunities to benefit consumers.