The Financial Conduct Authority has set itself some ambitious targets in its aim to support the financial sector in driving positive change on climate issues.
Last November, as debates among world leaders raged on at the United Nations Climate Change Conference (COP26) in Glasgow, the financial regulator published its ESG strategy alongside a discussion paper on implementing the government’s ambitions for Sustainability Disclosure Requirements and investment labelling.
So far we know that the regulator intends to solve the ESG terminology conundrum, which makes investing in ESG markets confusing for investors as funds often fail to outline clearly their exact ESG strategy, by introducing a set of labels.
In the same paper, the FCA has also stated it aims to force advisers to raise ESG options with their clients.
In particular, it stated it was exploring how to introduce “specific sustainability-related requirements” for advisers. “A key aim will be to confirm that they should take sustainability matters into account in their investment advice and understand investors’ preferences on sustainability to ensure their advice is suitable,” it added.
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