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FCA revamps ESG strategy to support sustainable future for UK financial sector

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The Financial Conduct Authority has refreshed its ESG (Environment Social and Governance) Strategy, to help support the transition to a more sustainable future.

The FCA has therefore, outlined a revamped ESG strategy which will develop clear standards for sustainability, diversity and net-zero targets, build high quality information for market participants and financial services firms to rely on, and create a well-functioning ecosystem that ensures firms take ESG seriously, deliver on promises and avoid ‘Greenwashing’.
 
This new ESG Strategy was published on the FCA website on the 3 of November, just 3 days after the 2021 United Nations Climate Change Conference (COP26) kicked off.
 
Building on the commitments identified in its Business Plan 2021/22, the FCA plans to tackle its new ESG Strategy under five main themes – three of which had already been outlined in its previous strategy, these are, ‘Transparency’, ‘Trust’, and ‘Tools’. The two additional themes are ‘Transition’, and ‘Team’.
 
‘Transparency’ will see the FCA improve transparency of listed companies’ and regulated firms’ performance on diversity and inclusion, promote global standards for sustainability reporting, and enhance climate-related financial disclosures.
 
‘Trust’ refers to support for fair and effective integration of ESG into financial market decision making, and trusted delivery of ESG-labelled securities, products and services.
 
‘Tools’ outlines the plans to influence internationally consistent outcomes in ESG, as well as deliver an ambitious Innovation work programme to support the market, consumers and regulators with innovative solutions, and collaborate with industry, UK regulators and the government.
 
‘Transition’ will see the FCA underpin a market-led transition to a net-zero and more sustainable future, and encourage effective investor stewardship.
 
Finally, ‘Team’ will ensure that, internally, the FCA will have the right organisational structures, resources and capabilities in place to appropriately integrate net zero and ESG considerations, and continue ‘systems thinking’ research on the ESG landscape.
 
Anthony Baker, CEO for Satellite Vu, says: “Enforcing positive ESG change in the private sector requires a concerted effort from business, government and our regulators, and it is positive to see the FCA outlining clear and actionable measures to help finance firms meet clearly defined sustainability targets.
 
“Businesses which are unsure of how best to improve sustainability and ESG policies are best advised to seek support from third party and independent advisors, and enlist the aid of cutting edge technological solutions which can outline the extent of their eco-related issues.”

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