FCA pleased with sustainability feedback

The FCA has published a summary of the feedback it received to its 2023 Discussion Paper on “finance for positive sustainable change“. Key themes from responses included:

• agreeing that it is important that firms clearly articulate the purpose behind their approaches to sustainability strategies and that the tone is set from the top, but noting that some of the themes from the paper, particularly around culture, would probably not be suited to formal rules;
• mixed views on whether “sustainability champions” are effective or whether in fact they could dilute accountability, and consensus that working groups need links to key governance structures and decision-makers;
• mixed views on whether specific sustainability strategy-related senior management responsibilities would be helpful;
• support for linking remuneration and incentives to sustainability-related objectives;
• general support for the UK Stewardship Code 2020;
• concerns that the breadth of issues that fall under sustainability mean there are gaps in knowledge, which risk poor customer outcomes and damage to market integrity; and
• a plea that the FCA should not make any new rules until current ones have been fully embedded.

The FCA is pleased with the responses, and has introduced its SDR and labelling rules and the Anti-Greenwashing Rule as well as the Consumer Duty since it published the original paper. It is not currently considering any additional rules but will continue to monitor the market and promote the themes that will enable the sustainable finance market to grow responsibly.