FCA calls for improvement in fund manager ESG principles

FCA has carried out a review as a follow up to its Dear Chair letter of July 2021 to authorised fund managers. It found that most firms have tried to comply with FCA’s expectations on design, delivery and disclosure of their ESG and sustainable funds, but that they need to make improvements to ensure they meet the requirements of the Sustainability Disclosure Requirements and the Consumer Duty. Concerns include:

  • inconsistent alignment of products and ESG and sustainability goals, including some instances where fund managers could not explain how certain investments would fit their goals;
  • key information not being explained or put into disclosures, so that investors did not readily have the information; and
  • the design of stewardship approaches being unclear in structure, aim and how the stewardship activities were aligned to meeting fund objectives.

Emma Radmore