The UK’s Financial Conduct Authority has updated its ESG strategy in order to develop clearer standards for sustainability, diversity and net-zero targets, and avoid ‘greenwashing’ by the asset management industry.
Launched three days into the United Nations Climate Change Conference (COP26), the regulator’s new approach to ESG focuses on five themes: transparency, trust, tools, transition, and team.
Across these themes, the FCA covers company reporting on sustainability, ensuring that asset managers take ESG seriously and deliver trustworthy products, encouraging better investment stewardship, and improving collaboration between industry, government, and regulators.
At the same time, investment consultants have been working to help asset managers improve their reporting on their stewardship and engagements to investors, as regulators step up pressure on asset owners to be active owners.
The UK Investment Consultants Sustainability Working Group (ICSWG) has published a new guide for asset managers reporting their engagements.
It aims to make asset managers’ investment stewardship more transparent to asset owners, enabling them to assess the quality of activity undertaken on their behalf.
ESG is growing ever-more important in companies’ access to capital. Almost three quarters of institutional investors worldwide say they are more likely to divest from companies with poor ESG track records, according to new research from EY.
The vast majority of investors, 90 per cent, also say that ESG performance has a greater influence over their investment decisions than it did before the Covid-19 pandemic.
Madeleine Taylor
Editor, Institutional Asset Manager