The FCA has launched a new strategy to help investors make more informed ESG investment decisions.

Coinciding with COP26 Finance Day, the regulator published a discussion paper to form part of the new ESG strategy, which is inviting views from the industry on potential criteria to classify and label investment products.

The strategy sets out the FCA’s role in supporting the transition to a more sustainable economy, working with industry, listed companies, government and international partners. Building trust and integrity in the market for ESG products, and ensuring transparency, are central to the strategy.

In a recent survey, the regulator found that 80% of its 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”, while 71% would not put their money into “investments which are unethical”.

If the financial sector is to respond effectively to this growing demand for ESG products across the economy, the regulator suggested that consumers need “high quality information and clear standards”. The FCA has therefore encouraged its stakeholders to engage with the discussion paper so it can design a disclosure and labelling system to achieve this.

“It is vital that we innovate to support industry’s shift to a more sustainable future,” said FCA chief executive, Nikhil Rathi. “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.”

In a speech at COP26, Rathi is also announcing that the FCA will confirm its final rules on disclosures for a wider scope of listed issuers, as well as asset managers, life insurers and FCA-regulated pension providers, by the end of 2021.

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