- On 30 January 2026, the FCA published its Consultation Paper on the switch from TCFD-aligned disclosure rules for listed companies to UK SRS-aligned disclosure rules (CP26/5
FCA Consults on UK SRS-Aligned Disclosure Rules for UK Listings
FCA Finds Further Improvement Needed on Design, Delivery, and Disclosure of ESG Funds
The FCA has set out good and poor practices for asset managers to consider in relation to funds with ESG or sustainable characteristics.
By Nicola Higgs, Anne Mainwaring, and Charlotte Collins
On 16 November 2023, the FCA published the findings from its review of how asset managers have been embedding current regulatory expectations regarding the design, delivery, and disclosure of funds marketed as having ESG or sustainable characteristics.
With the FCA yet to finalise its Sustainability Disclosure Requirements (SDR) and investment labelling regime, it reviewed authorised fund managers’ (AFMs’) compliance with existing regulatory requirements, including the Guiding Principles set out in the Dear Chair letter issued in July 2021 (see this Latham blog post). The recently implemented Consumer Duty has added an extra dimension for AFMs to consider since the Guiding Principles were issued. The FCA highlights that the consumer understanding outcome is particularly relevant for AFMs providing ESG or sustainable funds; under this outcome, firms need to provide investors with the information they need at the right time and present it in a suitable way.
European Commission Launches Consultation on Sustainable Finance Disclosure Regulation
The EU regulators are reviewing the Sustainable Finance Disclosure Regulation introduced in 2021, exploring the need for potential additional adjustments.
By Paul A. Davies, Nicola Higgs, Michael D. Green, James Bee, and Anne Mainwaring
On 14 September 2023, the European Commission initiated a consultation on its sustainable financial disclosure practices, seeking feedback on Regulation (EU) 2019/2088 — the Sustainable Finance Disclosure Regulation (SFDR). The consultation surveys stakeholders’ experiences during the implementation of the SFDR and, in particular, solicits feedback on its interactions with the broader EU sustainable finance framework.
UK Advisory Taskforce Releases Recommendations for UK Green Taxonomy Reporting
The Green Technical Advisory Group, which is guiding the UK government’s implementation of a UK Green Taxonomy, has issued detailed advice for the upcoming legislation.
By Paul A. Davies, Michael D. Green, and James Bee
In September 2023, the Green Technical Advisory Group (GTAG), chaired by the Green Finance Institute, has released four reports offering technical advice to HM Treasury on the development of a UK Green Taxonomy:
- “Developing a UK Taxonomy Adapted to the UK’s Needs” — assesses short- and medium-term priorities for establishing a usable taxonomy
- “Getting KPIs Right: Implementing an Effective Reporting Regime for the UK Green Taxonomy” — outlines issues in European taxonomy reporting Key Performance Indicators (KPIs)
- “Treatment of green financial products under an evolving UK Green Taxonomy” — reviews how the UK Green Taxonomy affects previously considered “green” activities
- “Operational considerations for taxonomy reporting” — provides recommendations for minimising data gaps in disclosures and guidance on the use of proxies
GTAG’s latest guidance seeks to provide a roadmap for the UK Green Taxonomy. While it draws on many elements of the EU taxonomy, GTAG has stated that it has looked to adapt the UK Green Taxonomy to provide a “more effective reporting framework” for both disclosing businesses and investors within the UK context.
UK Government Consults on Regulation of ESG Ratings Providers
The consultation considers what a potential regulatory regime would look like, and its proposed scope.
By Nicola Higgs, Paul A. Davies, Becky Critchley, Anne Mainwaring, Ella McGinn, and Charlotte Collins
On 30 March 2023, HM Treasury published a consultation on regulating ESG ratings providers, which ties in with and was published alongside the UK government’s latest Green Finance Strategy paper.
The government announced as part of the Edinburgh Reforms last year that HM Treasury would consult on a potential regulatory regime for ESG ratings providers. Now HM Treasury is seeking views on whether such a regime should be introduced, and what its potential scope should be. The government is not proposing to regulate ESG data providers for the time being. The consultation is open until 30 June 2023; no further timetable has been set at this stage but it could take a couple of years for any new regime to be finalised and take effect.
FCA Seeks Improvements to ESG Benchmarks
The regulator is concerned that ESG-related disclosures are not meeting expectations.
By Nicola Higgs, Becky Critchley, Anne Mainwaring, Ella McGinn, and Charlotte Collins
The FCA has published a Dear CEO letter sent to benchmark administrators on 20 March 2023, expressing concerns about the quality of their ESG-related disclosures. The FCA’s concerns are based upon a preliminary review of ESG benchmarks, which assessed the disclosures made by a sample of UK benchmark administrators. The review found the quality of ESG-related disclosures to be poor, and the letter sets out the FCA’s specific findings in this regard. The FCA states that it is acutely aware that poor practices in this area could lead to claims of greenwashing and dilute trust and confidence in ESG labelling. Therefore, the FCA is not only concerned about technical compliance with disclosure requirements, but also about ensuring the integrity of ESG-related products.
FCA Proposes New Labelling and Disclosure Rules to Combat Greenwashing in the UK
The FCA hopes the proposals will protect consumer trust in ESG-related financial products and help consumers navigate the increasingly complex ESG-related financial market.
By Paul A. Davies, Nicola Higgs, Michael D. Green, James Bee, and Anne Mainwaring
On 25 October 2022, the UK’s Financial Conduct Authority (FCA) issued a consultation paper (the Consultation Paper) on Sustainability Disclosure Requirements (SDR) and investment labels.[1] According to the FCA, investment firms in the UK may intentionally or unintentionally be making exaggerated, misleading, or unsubstantiated sustainability-related claims about their products — also known as greenwashing — which has impacted consumer confidence in ESG-related or sustainable investment products in the UK. The proposals in the Consultation Paper seek to address this risk and restore consumer faith.
FCA Identifies “Clear Rationale” for Regulating ESG Data and Ratings Providers
The FCA emphasised the increasing prevalence of providers and the potential harm from lack of regulation in this area.
By Paul A. Davies, Nicola Higgs, Michael D. Green, and James Bee, and Anne Mainwaring
In June 2022, the UK’s Financial Conduct Authority (FCA) issued a Feedback Statement in response to a consultation paper on ESG integration in capital markets that it had initially issued in June 2021. The consultation sought views from stakeholders on certain issues in relation to both ESG-related debt instruments (e.g., green and social bonds) and the role of ESG data and ratings providers, topics the FCA identified as “active areas of industry debate”.
FCA Seeks to Improve Quality of ESG Fund Disclosures
FCA has published guiding principles on the design, delivery, and disclosure of ESG and sustainable investment funds.
By Nicola Higgs, David Berman, Paul Davies, Anne Mainwaring, and Charlotte Collins
On 19 July 2021, the FCA published a letter sent to chairs of authorised fund managers, which sets out the regulator’s expectations regarding disclosures by funds that make ESG-related claims. The FCA aims to ensure that any ESG-related claims are clear and not misleading, both when a fund is applying for authorisation and on an ongoing basis.
The FCA has published these principles in response to the significant increase in funds applying for authorisation that have an ESG or sustainability focus. The FCA notes that applications are often poor quality and fall below its expectations, and many make claims that cannot be substantiated. The FCA observes that, in general, fund applications in this area often do not contain sufficient, clear information explaining their chosen strategy and how this relates to the assets selected for the fund.
UK Regulators Launch Discussion on Diversity and Inclusion
Discussion Paper opens debate on potential new rules to improve diversity in financial services.
By Rob Moulton, David Berman, Paul Davies, and Charlotte Collins
On 7 July 2021, the FCA, the PRA, and the Bank of England published a joint Discussion Paper on diversity and inclusion in the financial sector. The regulators, in particular the FCA, have been focused on diversity and inclusion as regulatory issues for some time. According to the regulators, research shows there is a positive correlation between increased diversity and inclusion and better outcomes in risk management, conduct, culture, and innovation. Therefore, improving diversity and inclusion in financial services is seen as tying in closely with the regulators’ objectives. In the Discussion Paper, the regulators consider diversity and inclusion not only in terms of how a firm is run internally, but also how the firm serves its customers.