FCA revamps ESG strategy for UK’s financial sector

The UK’s Financial Conduct Authority (FCA) has refreshed its ESG strategy to better support a sustainable future for the financial sector in the UK.

Building on the commitments identified in its Business Plan 2021/22, the FCA said it aims to tackle its ESG strategy under five main themes, the first three of which had already been outlined in its previous strategy: ‘Transparency’, ‘Trust’, ‘Tools’, and the two latest themes are ‘Transition’ and ‘Team’.

The revamp follows the publication of the FCA’s new ESG strategy on November 3, released three days after COP26 kicked off.

As part of the strategy, the FCA released a discussion paper earlier this week, which set out plans to label investment products to help investors gain clarity on the sustainability of their investments.   

The FCA hopes its ESG strategy will develop clear standards, build high quality information for market participants to rely on, and create a well-functioning ecosystem that ensures firms take ESG seriously and avoids Greenwashing.

Its ‘Transparency’ initiative will see the FCA improve transparency of listed companies’ and regulated firms’ performance on diversity and inclusion, promote global standards for sustainability reporting and enhance climate-related financial disclosures.

‘Trust’ refers to support for fair and effective integration of ESG into financial market decision making. While the ‘Tools’ theme outlines the plans to influence internationally consistent outcomes in ESG.

‘Transition’, the FCA said, will see it underpin a market-led transition to a net-zero future and encourage effective investor stewardship. Finally, ‘Team’, aims to ensure that the FCA has organisational structures, resources, and capabilities in place to integrate net zero and ESG considerations on the ESG landscape.

Anthony Baker, CEO of Satellite Vu, which provides technology to collect temperature data from the Earth’s environment several times a day, expressed support for the FCA’s efforts. Vu said, “Enforcing positive ESG change in the private sector requires a concerted effort from business, government and our regulators, and it is positive to see the FCA outlining clear and actionable measures to help finance firms meet clearly defined sustainability targets.”

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