Sustainability Disclosure Requirements, responding to the FCA - members

The FCA has just published CP22/09, the Consultation Paper in follow-up to Discussion Paper DP21/04, with proposals for a new regime of Sustainability Disclosure Requirements (SDR) and investment labels designed to eradicate ‘greenwashing’ from the fund management industry.

In a nutshell the FCA’s proposals are for there to be three distinct sustainability labels:

• ‘sustainable focus’ – investing in companies that are environmentally friendly and socially sustainable,
• ‘sustainable improvers’ - investing in and stewarding companies that aim to transition and become more environmentally friendly or socially sustainable over time, and
• ‘sustainable impact’ – investing in companies with a purpose, solution or product to produce ‘real-world’ positive social or environmental impact.

What do you think of these proposals? Questions include:  Will they effectively eradicate greenwashing?  Will they confuse or helpfully inform retail investors?  Should the FCA be pursuing a different regulatory course to other leading global regulators?  What proportion of a fund needs to meet the criteria for the fund to carry one of the labels?  Should non-qualifying funds carry no label?  Should the requirements target social as well as environmental sustainability?

The purpose and activity of this working group is to:

• Author a letter in response to the FCA’s forthcoming consultation
• Potentially host a webinar or event with the FCA’s climate reporting team on the proposals

Who are CFA UK looking for?

• Individuals with a personal interest in fund sustainability reporting
• Members who are involved day-to-day either running funds or in the production of fund performance and marketing literature
• Availability for up to 18-24 hrs during Q4, 2022 (1.5-2hrs/week for 3 months)

What will you get out of it?

• Training in Group Working / Group Leadership
• Influence developments in fund sustainability reporting and policy making
• Network building
• Acknowledgement of your personal contribution in the letter to the FCA and publicly in LinkedIn and on the professionalism page of the CFA website
• Opportunity to present your findings to CFA UK’s Professionalism Steering Committee

Compliance Notes:

• Group members should seek and obtain compliance clearance from their employers in advance of participating
• Group members will participate in a personal capacity and not attend as representatives of their employer