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FCA to help investors make ‘informed’ ESG investment decisions

Nikhil Rathi, chief executive, said the association is developing ‘consistent, trusted standards’ that give investors the confidence to put their money where it can deliver the most sustainable outcome

The FCA has announced it will help consumers navigate their sustainability characteristics, according to its new Discussion Paper to coincide with COP26 finance day, inviting views on potential criteria to classify and label investment products. 

It revealed the paper forms part of the FCA’s new ESG Strategy, setting out the FCA’s critical role in supporting the transition to a more sustainable economy, working with industry, listed companies, government and international partners to build trust and integrity in the market for ESG products.  

The FCA is gathering feedback on supporting entity-level and product-level disclosures and will leverage existing initiatives in this area to ensure coherence with market practice and other regulation.

In its most recent Financial Lives survey, the FCA found 80% of respondents wanted their money to ‘do some good’, while also providing a financial return, 71% wanted to ‘invest in a way that is protecting the environment’ and 71% would not put their money into ‘investments which are unethical’.   

The FCA encourages stakeholders to engage with the Discussion Paper so that it can design a disclosure and labelling system to achieve this.  

Nikhil Rathi, chief executive of the FCA, said: “It is vital that we innovate to support industry’s shift to a more sustainable future. That is why the FCA has been leading from the front. Developing consistent, trusted standards are a vital part of that, giving investors the confidence to put their money where it can deliver the most sustainable outcome.”

“The strategy we have published today puts these standards front and centre, supported by supervision and enforcement where firms fail to meet them.”

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