On 2 April 2025, the Financial Conduct Authority (FCA) published the feedback it received to discussion paper DP23/1 on finance for positive change, along with its response and next steps.

Background

DP23/1 was published in February 2023, with the aim of encouraging an industry-wide dialogue on firms’ sustainability-related governance, incentives and competences. The FCA noted at the time that it intended to use the feedback in considering what the industry would find most helpful in this developing area and in developing its future regulatory approach.

Feedback

The FCA notes that the responses it received were generally positive about the importance of sustainability matters and the role of the themes outlined in DP23/1. It summarises the feedback received in relation to:

  • Objectives, purpose, business and strategy.
  • The role of the board and senior management.
  • Accountability.
  • Incentives and remuneration.
  • Investor stewardship.
  • Training and competence.

Common themes across the responses received included the need for new regulations (e.g. the Consumer Duty and the Sustainability Disclosure Requirements (SDR)) to “bed in” before determining whether any additional rules would be needed. The role of the International Sustainability Standards Board standards, and previously the Task Force on Climate-Related Financial Disclosures recommendations, in establishing a global baseline for sustainability disclosures was also mentioned.

FCA response

In its response, the FCA welcomes the level of engagement and flags the important role the engagement and dialogue has played in building its understanding of the state of play. It highlights the rules it has introduced since DP23/1 in relation to some of the themes, including the Consumer Duty, the SDR and labelling rules, and the Anti-Greenwashing Rule, and notes that many respondents to DP23/1 acknowledged the importance of these measures.

The FCA recognises the importance of allowing time for new measures to be implemented before introducing further rules in these areas, and that current practices are still developing in the areas covered by the DP that are not captured by these measures.

Next steps

The FCA confirms that it is not currently considering introducing new rules on the themes discussed in DP23/1, although it notes that those themes remain important to firms’ success in embedding sustainability considerations, delivering value to consumers, and supporting market integrity. It plans to continue monitoring developments in the market to ensure it is functioning well, focusing on areas where potential harm to consumers, market integrity or competition is greatest and where it thinks regulatory action can make a positive difference.

The FCA also explains that it will continue to promote the themes discussed in DP23/1 through other domestic and international initiatives, including carrying out supervisory engagement, bringing market participants together to develop market-led solutions, and influencing the global stage.