On 3 November 2021, the FCA published ‘A strategy for positive change: our ESG priorities’ which sets out the regulator’s updated ESG strategy following the publication in October 2019 of Feedback Statement 19/6: Climate change and green finance.
The FCA’s work is based on five core themes:
- Transparency: promoting transparency on climate change and wider sustainability along the value chain. This includes: enhancing climate-related financial disclosures; promoting global standards for sustainability reporting; and improving transparency of performance on diversity and inclusion.
- Trust: building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem. This includes developing a policy approach to ESG governance, remuneration, incentives and training / certification in regulated firms (stakeholder engagement is expected to begin in Q2 2022).
- Tools: working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts. This includes launching in Q1 2022 the Digital Sandbox and Green Fintech Challenge.
- Transition: supporting the role of finance in delivering a market-led transition to a more sustainable economy. This includes promoting well-designed, well-governed, credible and effective net zero transition plans by listed companies and regulated firms. Stakeholder engagement on this is expected sometime in H1 2022. Also, a consultation paper on prudential ESG disclosures is expected in Q3/Q4 2022.
- Team: developing strategies, organisational structures, resources and tools to support the integration of ESG into FCA activities.
The strategy also details how the FCA plans to deliver on the ESG-related target outcomes which are included in its Business Plan 2021/22. The FCA’s Upcoming ESG Milestones lay a foundation for future regulatory and market-led work, supporting positive ESG outcomes into the future.
The FCA will provide interim updates as part of its Business Plan and Annual Report in 2022, with a more detailed stock-take on progress in 2023.