A strategy for positive change: our ESG priorities

Corporate documents Published: 03/11/2021 Last updated: 21/11/2022 See all updates

Our environmental, social and governance (ESG) strategy sets out our target outcomes and the actions we expect to take to deliver these. Our aim is to support the financial sector in driving positive change, including the transition to net zero.


There is no doubt that the financial sector has an important role to play in helping the economy adapt to a more sustainable long-term future.  

Ahead of the United Nations Climate Change Conference (COP 26), there has been a strong focus on climate change and the role of finance in supporting the transition to a net zero economy.  

Companies and consumers are increasingly looking beyond climate change too. They are also considering wider environmental issues, such as nature and biodiversity, as well as social and governance issues, such as diversity and inclusion, the living wage, fair taxation and supply chains. And there is growing attention on the need for a 'just transition', which considers the social consequences of the shift to a net zero economy. 

Actors across the spectrum of financial services can be a force for good in this area. Institutions large and small can use their business decisions, their innovation and creativity, and their voice and their influence, to encourage positive change. 

But there is a risk of harm if the financial sector responds to rising consumer demand and awareness of ESG issues without a supportive regulatory foundation and adequate guard-rails.  

For instance, consumers, industry participants, civil society, regulators and the media are all increasingly questioning the integrity of some of the ‘green’ claims made by companies and financial firms.  

So, ESG matters are high on the regulatory agenda. If the financial sector is going to help support the transition to a more sustainable future, market participants and financial services firms need high quality information, a well-functioning ecosystem and clear standards. And consumers need to be able to rely on firms to take ESG seriously, avoid ‘greenwashing’ and deliver on their ESG promises.

Executive summary

Our ESG strategy

‘Transparency’ and ‘trust’ have been key themes of our work on climate change and ESG, reflecting the initial priorities we set out in October 2019 (FS19/6) and building on our extensive work over the years on corporate governance, senior manager responsibilities and culture and purpose.  

These remain core areas of focus, but our work is moving into a new phase. In mid-2021, we welcomed our first Director of ESG, Sacha Sadan. Leveraging the breadth of our powers and tools, Sacha has a mandate to embed ESG considerations, seamlessly and comprehensively, across our functions: a ‘golden thread’ approach.  

We are already working hard to ensure that we have the right arrangements and capabilities in place across the organisation to respond to the Chancellor’s expectation in our latest remit letter that we ‘have regard’ to the Government’s commitment to a net zero economy by 2050 in all our regulatory activities.  

But as society and the financial sector look beyond climate, we need to ensure that these arrangements are scalable to deliver a consistent, coherent and cross-cutting approach to ESG issues more broadly.  

So, building from our work so far, we have developed a refreshed ESG strategy. The strategy sets out how we plan to deliver on the target ESG-related outcomes included in our Business Plan 2021/22, along with some core principles that we have applied to identify the key themes of our work programme and our near-term priorities. 

Our work is based on 5 core themes:  

  • Transparency – promoting transparency on climate change and wider sustainability along the value chain 
  • Trust – building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem 
  • Tools – working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts 
  • Transition – supporting the role of finance in delivering a market-led transition to a more sustainable economy 
  • Team – developing strategies, organisational structures, resources and tools to support the integration of ESG into FCA activities 

As we deliver our strategy across these themes, we are collaborating with the Government, other UK regulators, industry and other stakeholders to ensure UK financial services and the UK regulatory regime are at the forefront of ESG internationally.  

We are also working actively with our international partners to develop robust and commonly agreed international standards on ESG that can serve global markets effectively. We want UK consumers, financial services firms and securities issuers to interact and operate within a world-leading system.  

And we are looking closely at how technology, innovation and a data-led approach can be harnessed to support the integration of ESG both across markets, and in our regulation.  

Our strategy will continue to develop as we respond to – and deepen our knowledge, resources and understanding of – the changing landscape. We expect to provide further detail and granularity in certain areas as our thinking evolves – most notably, our long-term objectives and priorities under each of the E, S and G dimensions; as well as our success measures and performance indicators.  


This page provides a high-level overview of our ESG strategy. We set out the outcomes we want to achieve and the strategic themes and key actions we expect to take to deliver these. While we will pursue these outcomes over multiple years, we have identified a number of interim milestones in the coming period. Our ESG strategy may be of particular interest to:  

  • listed companies and their advisors 
  • regulated financial services firms 
  • trade associations 
  • interest groups, civil society and academics 
  • professional services firms and other service providers 
  • Government and other regulators 

We will monitor progress against our commitments and measure the success of our interventions. We will provide interim updates as part of our Business Plan and Annual Report in 2022, with a more detailed stock-take on progress in 2023.  

We look forward to working with stakeholders to encourage the financial services sector – and wider society – towards a more stable and sustainable future.


What we mean by ESG and sustainability

ESG and sustainability are hugely important. But terms such as ‘climate’, ‘environment’, ‘sustainable’ and ‘ESG’ are often used loosely across the financial sector; and sometimes interchangeably.  

There is of course an overlap between the terms. Climate change is a core focus of environmental work, which is itself one pillar of ESG. And ESG captures the key dimensions of wider sustainability; that is, how people, planet, prosperity and purpose come together to help enable 'the needs of the present [to be met] without compromising the ability of future generations to meet their own needs' (see the United Nations Our Common Future report).  

Values are embedded in ESG. But importantly, the scope of ESG is much wider.  

The growing focus on ESG

In our 2020 Financial Lives Survey, almost two thirds of participants reported that they worry about the state of the world and feel personally responsible for making a difference. Four out of 5 respondents consider environmental issues important and believe that businesses have a wider responsibility than simply to make a profit.  

These beliefs are starting to influence individuals’ financial decisions. For example, according to the Investment Association, net retail sales of UK responsible investment funds reached almost £12 billion in 2020, accounting for 38% of total net retail sales.  

Societal expectations are matched by public policy and regulatory developments. For instance, in 2019, the UK was the first major economy to introduce a legislative commitment to a net zero economy by 2050.  

More recently, the Government has raised the level of its ambition, confirming a carbon emissions reduction target of 78% of 1990 levels by 2035. The Government’s policy direction has triggered policy and regulatory measures to green the financial system.  

The focus is also extending beyond climate. Nature and biodiversity are gaining attention. And social and governance issues are becoming more prominent – including recovery from the pandemic, and promoting diversity, inclusion, fair taxation and workers’ rights.  

The scale and urgency of the climate challenge rightly demands priority attention. However, since wider environmental and social matters are increasingly central to economic and financial decision making, our work too must encompass ESG considerations beyond climate change.  

As a regulator, we can set requirements and supervise proactively to promote firm behaviour in line with our expectations. But ultimately, a firm’s own governance and culture will be critical drivers and enablers of its performance on environmental and climate matters. And on its ability to drive positive change, for the benefit of its shareholders, clients and consumers, employees, and wider society.  

In undertaking our work on ESG, we will consider how healthy firm culture can help to maximise the impact of our interventions. 

Our work on climate change and ESG

Parliament has set us the strategic objective of ensuring relevant markets work well. To support this strategic objective, we have three operational objectives. These are to secure an appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system, and promote effective competition in the interests of consumers.  

As ESG considerations increasingly influence business and risk decisions in the real economy and the financial sector, they have the potential significantly to influence the integrity of our markets.  

And as product offerings and firm behaviour evolve, we need to ensure that ESG claims and credentials stand up to scrutiny, that consumers’ interests are protected, and that competition remains effective in the interests of consumers. 

Reflecting the level of its ambition, the Government has also raised its expectations of regulators. In our latest remit letter, received in March 2021, the Chancellor set a clear expectation that we should ‘have regard’ to the Government’s net zero commitments in all our regulatory activities.

Building from the FCA’s extensive and longstanding experience in areas such as governance, culture and purpose, we began to deepen our engagement on ESG issues in 2018.  

We sought feedback on regulatory priorities in this area with the publication of a Discussion Paper on Climate Change and Green Finance (DP18/8). We set out our initial commitments in a Feedback Statement (FS19/6) in October 2019, articulating our overarching objective in the following terms:

‘We want to ensure our regulatory approach creates an environment where market participants can adequately manage the risks from moving to a low carbon economy and are able to capture opportunities to benefit consumers. More broadly, we want to help…accelerate the transition to a net-zero economy.’ 


In FS19/6, we explored the outcomes we are looking to achieve as a regulator and set out our initial priorities, with a focus on:  

  • disclosure and transparency 
  • integrating consideration of climate change in firms’ business, risk and investment decisions – linked also to FS19/7 on wider investor stewardship 
  • promoting consumer access to genuinely green products and services 

We have pursued these priorities under 3 broad strategic themes: ‘Transparency’; ‘Trust’ and ‘Tools’, as articulated by our Chief Executive Nikhil Rathi in his Green Horizon Summit speech in November 2020. Here we provide an update on how we have delivered on our initial priorities and commitments.  

We have also prioritised work on diversity and inclusion. Jointly with the Bank of England and PRA, we published a Discussion Paper (DP21/2) in July 2021 seeking views on our plans to improve diversity and inclusion in financial services. This consultation closed in September and we are currently reviewing responses.  

Diversity and inclusion will remain a core area of focus for us. We welcome feedback and data which could help us develop policy in this space.  

Our ESG strategy

This is clearly a very dynamic space. So, building on the priorities we have identified and how these group thematically, we have refreshed our ESG strategy. This will drive our work programme in the coming period.   

In this section, we set out: 

  • the outcomes we are seeking to achieve, referencing the commitments in our Business Plan 2021/22 
  • the core principles underpinning the selection of our priorities 
  • the strategic themes we are pursuing
Infographic describing the 5 themes of transparency, trust, tools, transition and team.

Our Business Plan 2021/22 commitments

As noted in our Business Plan 2021/22:  

‘Financial services and markets have a central role in the transition to a low carbon economy and a more sustainable future. The Government has committed to achieving a net zero economy by 2050. We will support this aim by adapting our regulatory framework to enable a market-based transition.’ 


Consistent with our statutory objectives, we are targeting potential harms to market integrity and consumers as companies and firms adapt to the unfolding ESG landscape. We have committed to pursuing a series of outcomes in line with our objectives. We will pursue these outcomes over multiple years, but have identified a number of interim milestones in the coming period. 

Spanning the scope of our influence as a regulator – from listed companies, to regulated firms and markets, to consumers – our target outcomes are: 

  • high-quality climate- and wider sustainability-related disclosures to support accurate market pricing, helping consumers choose sustainable investments and drive fair value  
  • trust and consumer protection from mis-leading marketing and disclosure around ESG-related products 
  • that regulated firms have appropriate governance arrangements for more complete and careful consideration of material ESG risks and opportunities 
  • active investor stewardship that positively influences companies’ sustainability strategies, supporting a market-led transition to a more sustainable future 
  • integrity in the market for ESG-labelled securities, supported by the growth of effective service providers – including providers of ESG data, ratings, assurance and verification services 
  • innovation in sustainable finance, making use of technology to bring about change and overcome industry-wide challenges 

We also committed to enhancing ‘our role as a facilitator of sustainability in financial markets and firms by acting as a convener, agent of change and role model – including by working towards publishing a Climate Change Adaptation report later this year, as well as our own report aligned with the TCFD’s recommendations in 2022’. Our Climate Change Adaptation report was published in October 2021. 

In addition, the Business Plan 2021/22 identified a set of target outcomes on diversity and inclusion, both for us as an organisation, and across the financial sector. Diversity and inclusion is a key component of ESG – both in its own right, and as an enabler of creative solutions to other environmental and social challenges. The target outcomes for the sector are: 

  • regulated firms and listed companies have more diverse representation at all levels 
  • regulated firms and listed companies foster cultures that are inclusive so that staff can share their diverse experiences and backgrounds 
  • firms design and deliver products that reflect the diverse needs of consumers, offer fair value and are delivered in a fair and accessible way  

We are also taking into account commitments that we made in our response to recommendations from the Treasury Committee inquiry into the decarbonisation of the UK economy and green finance. And we have considered carefully the ESG-related recommendations in the Kalifa Review of UK Fintech

Infographic describing our business plan 2021/22 outcomes for ESG

Core principles

We have developed a programme of work to deliver the outcomes we set out in our Business Plan 2021/22. In doing so, we have had regard to the following core principles: 

Global solutions to global problems  

  • The United Kingdom is a global financial centre and the securities issuers and financial services firms that we regulate operate in global markets. So, we will continue to look outwards, playing a leadership role internationally and helping to drive progress towards global solutions in ESG.  
  • We are committed, as far as possible, to implementing regulations that align with international frameworks and standards. To develop and implement bespoke local solutions in isolation would lead to fragmentation, increase costs for businesses, and increase the risk of regulatory arbitrage opportunities– to the potential detriment of the ESG outcomes we aim to achieve.    

Walking the walk  

  • The commitments under our refreshed strategy span our interests both as a regulator and as an operating entity. We will not impose obligations and expectations on market participants, regulated firms or security issuers (both in how they operate as entities, and in how they embed ESG considerations in the products and services they provide), if we are not prepared to take similar steps ourselves.  
  • We are committed to improving our own diversity and inclusion, to ensure that we have an inclusive working environment and that our people reflect the society we serve. 

Building an ESG capability beyond climate change  

  • Much of our work to date has focused on climate change, reflecting the urgency of the climate challenge, the milestone of the UK hosting of the UN Climate Summit (COP 26), and the heightened expectations in this area among Government and industry stakeholders. However, we are committed to building resources and capabilities on ESG beyond climate change, and ensuring that our regulation takes a broader ESG perspective.  
  • We will leverage the extensive work we have already done recently, and over the years, on governance, diversity, culture and purpose. This is essential as listed companies and the financial sector respond to society’s evolving expectations on environmental and social matters.   

Supporting positive market-led solutions  

  • Consistent with the powers and objectives Parliament has given us, we facilitate positive market-led solutions where possible, collaborating closely with Government, other regulators, industry and other stakeholders.  
  • Rather than seeking to dictate outcomes, we focus our interventions on building sound regulatory foundations and setting appropriate guard-rails to make relevant markets function well – including as they adapt to new Government policy.  
  • Where we consider that regulatory intervention is necessary, we aim to strike the right balance between principles and prescription. In such a fast-moving space, to codify too much into the regulatory framework too soon could stifle innovation and hard wire the current state of knowledge and understanding.  
  • At the same time, we aim to ensure that our interventions are coherent with, and leverage, existing market practices both domestically and internationally. This will help to manage costs and guard against potential market distortions.  

Influence beyond rulemaking  

  • We will take full advantage of the breadth of the FCA’s regulatory tools – both formal and informal – to deliver our target ESG outcomes. This will allow us to be more flexible and react more quickly to change in an area where we expect rapid innovation and continuously improving understanding of the data.  
  • We will of course continue to drive changes in behaviour through formal rulemaking. But we recognise that we can have an impact in other ways too and that we will achieve better outcomes by working collaboratively with others. For instance, we can:  
    • use our convening powers 
    • support creative new ideas through our Innovation programmes 
    • set expectations through our supervisory processes and channels for less formal influence and engagement 
    • exert influence as a thought-leader and a role model, and by partnering and collaborating with others, including other financial regulators. 

Maximising impact  

  • By deepening our understanding of the ESG ecosystem, we will target our interventions on those sectors and activities where we will have the greatest impact (for instance, by virtue of the intermediary role they play).  
  • We will also:  
    • tailor our regulatory and supervisory approach accordingly to acknowledge the different circumstances, needs and capabilities of smaller and medium-sized organisations 
    • as appropriate, highlight best practice and put pressure on laggards 
    • draw on principles of behavioural economics to understand and influence behaviours that drive our desired outcomes 

This is consistent with how we are transforming as an organisation.  

Readying for a digital and data-led world  

  • Consistent with the transformation of the FCA as an organisation, we will take an innovative approach to how we embed ESG in our regulatory activities – including our supervision and oversight of securities issuers, market participants and regulated firms – and how we help deliver solutions and tools for the financial markets. 
  • We will hardwire data-led approaches into our processes from the initial proposal through to post-implementation review. We will leverage the world-leading capabilities of our Innovation Division as part of this. 

Our ESG strategy’s 5 themes

We have built on the core themes of our previous strategy: Transparency, Trust and Tools. These remain core areas of focus, but we have evolved the priorities under each of these themes in line with our target outcomes and the principles set out above.  

We have 2 additional themes. These aim to:  

  • support a market-led transition to a net zero, sustainable future (Transition
  • ensure that we have the right organisational structures, resources and capabilities in place to appropriately integrate net zero and ESG considerations in our work across the FCA (Team

Key actions

In this section, we elaborate on some of the key actions we are taking. We focus on near-term priorities and milestones, organised under each of our 5 themes.  

It is not an exhaustive summary of our ESG work programme. We are engaged in other ESG-related work, both internally and with domestic and international partners. And we will continue to build on this programme of work as this dynamic space evolves. So, there will be more to come.



This theme is about promoting transparency on climate change and wider sustainability along the value chain. 

A market-led transition to a more stable and less carbon-intensive economy – and a more sustainable future – will require high quality, consistent and comparable information on how climate-related, and wider ESG-related risks, opportunities and impacts are being managed across the economy and the financial sector. Better corporate disclosures will inform market pricing and support business, risk and capital allocation decisions.  

This is reflected in the UK’s TCFD implementation strategy and its wider ambitions for sustainability disclosures. The Government has committed to mandatory TCFD-aligned disclosure obligations across the UK economy by 2025. Building on this, in October 2021, the Government set out plans for economy-wide Sustainability Disclosure Requirements (SDR) as part of a Roadmap to Sustainable Investing. The SDR aims to ensure that 'the information exists to enable every financial decision to factor in climate change and the environment'. 

Enhanced disclosures to clients and consumers will help them make more informed financial decisions – in turn enhancing competition between providers, protecting consumers from unsuitable financial products (see ‘Trust’), and encourage the flow of funds to more sustainable projects and activities. 

There have been positive developments in ESG disclosures, especially on climate change. But the needs of investors and other providers of capital are still not being adequately met. This, at least in part, reflects the rapid pace of change. Regulatory intervention will accelerate progress. 

Key actions



Here, the focus is on building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem. This is relevant to all of our operational objectives: protecting consumers; protecting and enhancing market integrity; and promoting effective competition in the interests of consumers.  

Market participants and consumers must be able to trust green and other ESG-labelled financial instruments and products. They must be able to rely on them to display the sustainability characteristics that they claim to have, and to perform as they expect.  

So, we aim to ensure that the financial sector operates fairly, effectively and with integrity. And that it delivers high-quality instruments, products and services that genuinely meet investors’ ESG preferences and are free from ‘greenwash’.

Key actions

Create the right conditions for fair and effective integration of ESG into financial market decision-making, and trusted delivery of ESG-labelled securities, products and services, including the following actions.



We are committed to working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts.

In a fast-moving and challenging space, progress towards positive ESG outcomes will depend on sharing experiences and providing mutual support. The actions under this theme are focused on using the FCA’s relationships, convening powers and, as appropriate, regulatory tools to:

  • help build industry capabilities, overcome challenges and drive good practice 
  • support and contribute to the advancement of knowledge in the ESG space 
  • ensure that our regulation of ESG benefits from the collective knowledge and experience of the FCA’s extensive network  

Reflecting this, we will work closely with domestic and international stakeholders, partnering as appropriate to pursue ambitious, but consistent and globally-aligned, standards on ESG issues.

Key actions



We will deepen our work to support the role of finance in delivering a market-led transition to a more sustainable economy. 

A market-led transition will require that listed companies and regulated firms have the right incentives, tools and organisational arrangements in place to set and pursue effective ESG strategies, including transition plans aligned with the Government’s net zero targets.  

As a regulator, we can facilitate this by:  

  1. clarifying our own expectations 
  2. promoting credible and effective ESG strategies and transition plans 
  3. addressing any regulatory barriers 
  4. encouraging good market discipline, including through effective investor stewardship  

Key actions  



Under this theme, we are developing strategies, organisational structures, resources and tools to support the integration of ESG considerations into our activities. 

We need to adopt a holistic and cross-cutting approach to ESG issues if we are to deliver effectively on the outcomes we are targeting. This requires staff training and awareness, processes and systems, and high-quality data and intelligence across our regulatory functions. We need to be able to monitor and analyse developments effectively and leverage our regulatory tools with maximum effect. 

Alongside this, we must hold ourselves to the same standards we expect of listed companies and regulated firms. We must ensure that our own ESG performance stands up to scrutiny, both in our role as a regulator and in how we operate as an organisation. Role modelling genuine change and high-quality transparency sets a clear bar for those on whom we place requirements; and shows that we are prepared to ‘walk the walk’.  

Key actions

Commitments and next steps

We have set out the work we are currently undertaking and intend to undertake as part of our ESG strategy.  

We have explained the background and context of our work, the key elements of our refreshed strategy, and the actions we are taking. We have also summarised our key workstreams, the themes and Business Plan 2021/22 outcomes to which they relate, and the key milestones to the end of 2022.

These milestones will lay a firm foundation for future regulatory and market-led work in this area, supporting positive ESG outcomes into the future. 

We will develop data-led strategies for delivery, and management information and key performance indicators to monitor and assess the success of our interventions. These performance indicators and information will also serve to hold us to account. 

We are keen that industry participants should welcome this work. They should be able to take more informed business decisions, and know that they are operating in fair, effective market, that displays integrity and commands trust. We will gather feedback both through our supervisory work and liaison with stakeholders.  

We will provide interim updates on our work as part of our Business Plan and Annual Report in 2022. We will produce a more detailed stock-take on progress in early 2023. 

As we get going on this exciting programme, we welcome proactive communication and feedback from industry and other stakeholders. We encourage stakeholders to share their thoughts with us. 

What we’ve delivered against 2019 priorities

Reflecting on our strategic objective to make relevant markets function well – and our operational objectives to protect and enhance market integrity, to protect consumers, and to promote effective competition in the interests of consumers – our Feedback Statement on Climate Change and Green Finance (FS19/6) set out an initial work programme to achieve the following outcomes:  

  1. Issuers provide markets with readily available, reliable and consistent information on their exposure to material climate change risks and opportunities  

  1. Consumers have access to green finance products and services, which meet their needs and preferences, and receive appropriate information and advice to support their investment decisions 

  1. Regulated financial services firms integrate consideration of material climate change risks and opportunities into their business, risk and investment decisions  

A subsequent Feedback Statement on Building a Regulatory Framework for Effective Stewardship (FS19/7) set out related actions and next steps on investor stewardship. The aim of these was to support market-led efforts to dismantle informational, institutional and incentive barriers to effective stewardship and build on regulatory measures introduced earlier in 2019.  

The tables below set out the key actions we committed to in these Feedback Statements and updates on the steps we have taken to deliver on our stated priorities.  

Table 1: FS19/6: Climate change and green finance


Our key committed actions

Update on actions taken
1 Publish a Consultation Paper on new rules on Taskforce for Climate-related Financial Disclosures-aligned climate change disclosures 

Introduced TCFD-aligned disclosure rules for premium listed issuers, with effect from 1 January 2021 (PS20/17, published December 2020), further to consultation during 2020 (CP20/3)  

Contributed to Government's Interim Report and Roadmap towards mandatory climate-related disclosures, published November 2020 

Published consultation papers (CP21/17 and CP21/18) in June 2021, proposing respectively to: 

  • enhance client- and consumer-focussed climate-related disclosures by asset managers, life insurers, FCA-regulated pension provider 
  • extend the application of the existing rule for premium-listed issuers to standard listed issuers of equity shares 
2 Clarify that existing rules require disclosure of all financially material climate related risk Issued Primary Market Technical Note 801.1 on disclosures in relation to ESG matters, including climate change; published December 2020
3 Publish a Feedback Statement on Stewardship, which will signal our continued supervisory and policy interest in this topic and set out next steps Feedback Statement (FS19/7) on building a regulatory framework for effective stewardship published October 2019 (see below for further details) 
4 Publish a Policy Statement on Independent Governance Committees’ consideration of ESG factors  Introduced rules extending the remit of Independent Governance Committees (PS19/30; published December 2019)
5 Finalise measures to facilitate investment in patient capital Introduced rules to give effect to Long Term Asset Fund
6 Green FinTech Challenge Green FinTech Challenge 2.0 opened for applications in September 2021
7 Challenge firms where we see potential greenwashing, clarify our expectations and take appropriate action to prevent consumers being misled Carried out further policy work during 2020, as well as consumer research on how consumers make investment choices (see also 'Trust')
8 Carry out further policy analysis on greenwashing and take action (eg guidance) to address concerns as appropriate Issued Dear Chair letter to authorised fund managers setting out our expectations in the form of a set of guiding principles for the design, delivery and disclosure of ESG/sustainable investment funds
9 Engage and consider the proposals of the European Commission’s Sustainable Finance Action Plan relevant to products and services, particularly around product disclosures  We are considering the European Commission’s Sustainable Finance Disclosure Regulation and proposed Regulatory Technical Standards as we develop our policy design for the FCA’s implementation actions under the Government’s proposed SDR   
10 Joint work with Government, other regulators and industry Ongoing; including via the Climate Financial Risk Forum and domestic and international regulatory working groups

Table 2: FS19/7: Building a regulatory framework for effective stewardship

  Our key committed actions Update on actions taken
11 In the first quarter of 2020, we will hold an industry workshop, jointly with other regulators, to discuss how asset owners set and communicate their stewardship objectives and how well these are adopted by asset managers and service providers  Workshop held, February 2020. The ‘actions and next steps’ from the workshop called on industry to carry out further work in the areas of contractual and non-contractual arrangements between asset owners and asset managers – including in relation to voting transparency and practices, and asset manager reporting – and the role of investment consultants
12 We will engage with industry work led by the Investment Association that is considering how to promote along-term perspective in investment mandates and in asset owners' other arrangements with asset managers

We participated as observers in 2 industry working groups under the Treasury’s Asset Management Taskforce that developed a report on ‘Investing with Purpose’, published in November 2020.  

We are also participating as observers in a joint working group of the Investment Association and Pensions and Lifetime Savings Association which is considering possible measures to enhance asset manager-asset owner relationships in respect of stewardship

13 The Treasury is considering the CMA's recommendation to bring investment consultants under FCA-regulation and will consult in due course. Pending the outcome of this consultation, we will consider stewardship as part of our work with the Treasury to design an appropriate regulatory regime The Treasury continues to consider bringing investment consultants within the FCA’s regulatory perimeter
14 We will continue to work with industry to identify areas of concern in relation to MAR and competition law and provide clarity so that issuers and investors can engage effectively within the bounds of the regulation

We have continued a dialogue with NGOs and other industry participants on this matter and committed to consider providing guidance if concrete issues are brought to our attention.  

We have engaged with the Competition and Markets Authority on competition law issues in this area, and under the strategy described in this document, we will begin stakeholder engagement (see ‘Trust’)

15 We will consult in early 2020 on proposals to introduce new 'comply or explain' climate change disclosure rules for certain listed issuers aligned with the TCFD's recommendations; we will also clarify existing disclosure obligations See item 1, above
16 We will support the Law Commission's scoping study on intermediated securities We contributed to the Law Commission’s scoping paper, published in November 2020
17 We will consider outcomes as the new regulatory regime for proxy advisors, introduced in the context of SRD II, beds in Ongoing; we will consider this alongside work to assess the recommendations of the Taskforce on Pension Schemes Voting Implementation, published in September 2021 
18 We will consider the role played by specialist providers of ESG data services. As a first step, we are looking at the nature and quality of these services, how investors use them and how much they rely on them We have considered the role ESG data and ratings providers and sought feedback on potential issues and harms in this area in CP21/18, published in June 2021

We will consider further the role of firms' culture, governance and leadership in ensuring that firms take appropriate action to manage their risks of climate change and support the wider transition to net-zero emissions 

We want to ensure our regulatory framework promotes transparency and accountability around climate change issues; this work could consider wider senior management accountability for stewardship

Our proposed new rules for IGCs will also be an important addition to the governance of stewardship in workplace personal pension schemes

New rules for IGCs published, December 2020 (see item 4, above). 

Further work on culture, governance and leadership on climate change and stewardship to be taken forward under the strategy described in this paper

20 We will continue to engage with the FRC as it implements its proposed activities and outcomes reporting under the UK Stewardship Code 2020  Dialogue with FRC ongoing, both bilaterally and as part of the wider Stewardship Regulators Group, formalised in early 2021 
21 We will continue to engage with firms on stewardship as part of our supervisory work Supervisory dialogue ongoing 
22 We will consider how best to enhance climate change disclosures by regulated firms, such as asset managers and life insurers; the approach we take will need to be coordinated with and informed by other ongoing initiatives See item 1, above
23 We will challenge firms where we see evidence of potential greenwashing, clarify our expectations, carry out further policy analysis and take further actions as appropriate See item 7, above


Page updates

: Information added CP22/20 and OP 62
: Information added Update to references of the Business Plan to include 2021/22
: Link changed Two broken links fixed.
: Information added PS21/24 and PS21/23
: Link added to PMB 36 and launch of ISSB
: Link added To Nikhil Rathi's speech.