FS22/4: ESG integration in UK capital markets

NEWS
Published
Jun 29th '22
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The Financial Conduct Authority (FCA) summarise feedback to their discussion chapter (in CP21/18) on environmental, social and governance (ESG) integration in UK capital markets and set out potential next steps.

 

Read FS22/4 (PDF)

 

In the discussion chapter, the FCA asked for feedback on potential harms that may require policy intervention and on actions they could take to enhance market effectiveness and promote a sound ESG data ecosystem.

 

The sought views on:

 

  • issues related to green, social, sustainability and sustainability-linked debt instruments (ESG-labelled debt instruments), including:
    • prospectus and ‘use of proceeds’ (UoP) bond frameworks
    • the role of verifiers and second party opinion (SPO) providers
  • ESG data and rating providers

 

This Feedback Statement brings together respondents’ views and sets out the FCA policy response and potential next steps.

 

They have also published Primary Market Bulletin 41, which elaborates on FCA’s response to stakeholder feedback and clarifies expectations of issuers of ESG-labelled debt instruments.

 

Who this applies to 

This FS is likely to be of interest to, but not limited to:

 

  • regulated firms
  • listed companies and their advisors and sponsors
  • investors and asset owners
  • verifiers and SPO providers
  • accountants and auditors
  • ESG data and rating providers
  • consumer groups and individual consumers
  • industry groups, trade bodies and civil society groups
  • policymakers and regulatory bodies
  • industry experts and commentators
  • academics and think tanks

 

Background

In the FCA ESG Strategy, they stress that market participants and consumers must be able to trust green and other ESG-labelled financial instruments and products. A key outcome of the FCA ESG Strategy is to promote ‘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.’ This FS and the accompanying Primary Market Bulletin will support this outcome by clarifying views on current practice in ESG-labelled debt markets and potential next steps in relation to ESG data and rating providers.

 

Next steps   

Having reflected on the feedback received, the FCA summarise the key policy actions they are taking, including the publication of Primary Market Bulletin 41. The FCA also signal their potential future direction in respect of ESG-labelled debt markets and ESG data and rating providers.

 

Source: FCA