Since November 2021, we have sharpened our focus on environmental, social and governance (ESG) risks. Our goal was not to grow the market, but to improve climate and sustainability disclosures for markets and consumers.
Fair value
Outcome 1: Trust and consumer protection from misleading marketing and disclosures around ESG-related products
| Metric code | Metric description | Source | Baseline Value | Year 1 values | Year 2 values | Year 3 values | Latest status (year 3 value compared to baseline) |
|---|---|---|---|---|---|---|---|
| NZE1-M01 | Increase in quality and quantity of climate-related and sustainability disclosures (metric for quality to be determined) | FCA and Financial Reporting Council (FRC) | Average page length in AFRs – 5 pages (2022) 90% of companies included a statement in their AFR (2022) | N/A | We used the FCA/FRC review of climate-related financial disclosures by premium listed commercial companies to measure this outcome. We have evolved our methodology for this metric, which means comparisons between years at this stage are not possible. Instead, we propose to use Financial Lives surveys to measure this outcome in the future, focusing on consumer perceptions of disclosures (NZE1-M02).
| Metric retired | Metric retired |
| NZE1-M02 | Decrease in consumer perception that providers overstate sustainability credentials of funds in their marketing. | Financial Lives survey (FLS 2023 recontact survey) | 57% of consumers who have any investments (excl. real investments) or a DC pension in accumulation or decumulation and have invested responsibly with their pension savings or other investments, slightly or strongly agree that providers often overstate the sustainability credentials of these funds in their marketing. Only 6% slightly or strongly disagree with this. (2023 re-contact survey) | N/A | N/A | 46% of consumers slightly or strongly agree Difference between year 3 and baseline value is statistically significant. | Improved |
Confidence
Outcome 2: High-quality climate- and wider sustainability-related disclosures to support accurate market pricing, helping consumers and market participants choose sustainable investments and drive fair value
| Metric code | Metric description | Source | Baseline Value | Year 1 values | Year 2 values | Year 3 values | Latest status (year 3 value compared to baseline) |
|---|---|---|---|---|---|---|---|
NZE2-M01
| Monitor the incidence of misleading marketing for ESG products | We continue to monitor misleading marketing, including for ESG-related products. We decided not to develop a metric for this activity as it is carried out as part of our usual supervisory work. Our Sustainability Disclosure Requirements regime now applies for sustainability-related investment products and we continue to challenge and support firms so consumers are provided with information about financial products that is clear and not misleading. | Not assessed | ||||
NZE2-M02
| Increase in consumer trust in ESG related products
| FCA Financial Lives survey (FLS)
| 76% of consumers, who have any investments (excl. real investments) or a DC pension in accumulation or decumulation, who have invested responsibly with their pension savings or other investments, slightly or strongly agree that they find it hard to tell which funds are genuinely following responsible investment principles and which are not (2022) | N/A | 68% of consumers (2023 re-contact survey)
| 68% of consumers (2024)
| Improved |
FCA Financial Lives survey (FLS)
| 53% of consumers, who have any investments (excl. real investments) or a DC pension in accumulation or decumulation, and have invested responsibly with their pension savings or other investments, slightly or strongly agree that the last time they invested in this way they received enough information to be able to assess how responsible the fund was (2022)
| N/A | 49% of consumers (2023 re-contact survey)
| 45% of consumers (2024) Difference between year 3 and baseline value is statistically significant. | Declined | ||
| NZE2-M03 | Monitor Enforcement and Supervisory cases of financial crime, fraud, and mis-selling of ESG related products |
| Since the inclusion of this metric our regulation has evolved and the development of our SDR regime means we will now identify a more structured basis for classifying ESG- related products, linking to metric NZE2-M01. We will therefore retire this metric and focus on the implementation and supervision of the SDR regime (which includes the Anti-Greenwashing Rule). | Metric retired | Metric retired |
Outcome 3: Active investor stewardship that positively influences companies’ sustainability strategies, supporting a market-led transition to a more sustainable future
| Metric code | Metric description | Source | Baseline Value | Year 1 values | Year 2 values | Year 3 values | Latest status (year 3 value compared to baseline) |
|---|---|---|---|---|---|---|---|
| NZE3-M01 | We are working with industry leaders and other regulators to decide how to develop indicators for the effectiveness of stewardship | We want to continue to see active investor stewardship that supports a market-led transition to a more sustainable future. There are significant challenges in devising robust metrics to reflect the impact of investor stewardship on companies' sustainability strategies. In practice, there are many factors that affect sustainability, including social and legal factors, so isolating the effect of stewardship activities is challenging. Therefore, for Metric NZE3-M01 we will continue to support active investor stewardship but will retire this metric. | Metric retired | Metric retired |
What the latest metric values tell us
Over our 3-year strategy, we set out to achieve the following outcomes:
- Trust and consumer protection from misleading marketing and disclosures around ESG-related products.
- High-quality climate and wider sustainability-related disclosures to support accurate market pricing, helping consumers and market participants choose sustainable investments and drive fair value.
- Active investor stewardship that positively influences companies’ sustainability strategies, supporting a market-led transition to a more sustainable future.
We made meaningful progress, but there’s more to do.
We’ve seen encouraging signs that consumer trust in sustainable finance is improving. Our Financial Lives survey shows more consumers now trust sustainability claims, for example, fewer consumers who have invested responsibly find it difficult to identify which funds are acting responsibly and fewer feel that providers often overstate the sustainability credentials of the funds in their marketing. However, fewer investors felt they received enough information to judge how responsible a fund was the last time they invested in this way (NZE2-M01, NZE2-M02). This highlights a mixed picture - while trust and awareness are growing, transparency remains an area for further development.
Since we set our outcomes and metrics, the ESG landscape has evolved rapidly. New frameworks and standards have been introduced, including our Sustainability Disclosure Requirements (SDR) and investment labels. These aim to provide clearer, more consistent information to help consumers make informed choices.
Early signs are promising. A December 2024 survey by the Investment Association and Wisdom Council found that over half of retail investors were already aware of the SDR labels, and 94% said they would find them helpful.
We also supported the development of international standards through the International Sustainability Standards Board and continue to work with the Government on endorsement. Looking ahead, the Government has committed to bringing ESG rating providers into our regulatory perimeter, helping to build a globally consistent and trusted ESG ecosystem.
We will continue to promote strong investor stewardship. For example, the industry-led Vote Reporting Group is developing a standardised vote reporting template for UK asset managers, due in 2026. This will reduce costs and improve transparency on how investments are managed. The FRC published the revised UK Stewardship Code, and we will now need to assess impact and effectiveness of this to support high-quality stewardship standards in UK markets.