On 19 December 2023, the FCA published Primary Market Bulletin 46, which focuses on Article 10 of the EU Market Abuse Regulation (MAR) and environmental, social and governance (ESG) stewardship, as well as sponsor procedures in relation to the Task Force on Climate-Related Financial Disclosures (TCFD)-aligned disclosure requirements.

Article 10 MAR and ESG stewardship

In Primary Market Bulletin 46, the FCA addresses questions raised by certain stakeholders in relation to Article 10 MAR and market conduct issues more generally in the context of shareholder co-operation regarding ESG stewardship including, for example:

  • Whether a major shareholder’s voting intentions on significant transactions, influenced perhaps by ESG stewardship concerns, may constitute inside information, thus restricting trading by that shareholder.
  • Whether Article 10 might apply where major shareholders wish to discuss their stewardship plans for particular issuers with other shareholders with similar ESG strategies.
  • Whether the shareholder may or should disclose its voting intentions to the market.

The FCA notes that it is not purporting to give guidance on specific hypothetical scenarios, as it is unable to do so. The extent to which any engagement between shareholders, or those between a company and its shareholders might contravene UK MAR or raise other market conduct issues, will depend on the specific circumstances in any given case.

TCFD-aligned disclosures: sponsor procedures

Following the introduction of the TCFD-aligned disclosure requirements for premium listed commercial companies, the FCA has conducted an initial assessment of how sponsors have made changes to their own procedures to assess whether new applicants have procedures in place to enable them to comply with the relevant requirements. In Primary Market Bulletin 46, the FCA outlines its initial observations following submissions from a small group of sponsors, highlighting examples of good practice where relevant.

The FCA concludes that:

  • Overall, against a dynamic background of evolving practice in climate-related areas and with issuers and advisers preparing for further developments in international accounting and assurance standards, it was encouraged to see that sponsors are taking steps to ensure their staff and procedures are well positioned to reflect the latest requirements of the Listing Rules.
  • Whilst it does not expect sponsors to become climate experts in the context of assessing whether an issuer has established procedures to enable it to comply with its obligations on an ongoing basis, the FCA does encourage sponsors to consider its findings and recommendations, including whether changes to their own procedures and policies may be appropriate.
  • The review did not identify any deficiency regarding record keeping and indeed revealed circumstances where fewer records might reasonably have been kept.
  • Sponsors may find it useful to monitor and engage, where appropriate, with the FCA’s ongoing policy development on sustainability reporting for listed companies.