The UK Government is driving progress with the introduction of a sustainability disclosure regime and investment labels, as part of the Greening Finance Roadmap. However, it is important that these sustainability disclosure requirements link with other tools, such as Mandatory transition plans and the new UK green taxonomy, to create a credible and sustainable UK Net Zero Financial System.
E3G provided feedback on the FCA’s proposals to introduce Sustainable Disclosure Requirements and Investment Labels for asset managers and FCA-regulated asset owners. Building on the existing structure of the TCFD, these developments will follow the commitments made in HM Government’s ‘Greening Finance: A Roadmap to Sustainable Investing Roadmap’ published in October 2021. Furthermore, E3G encourages the FCA’s aims to introduce tools that will build trust in the market, increase transparency, and provide information on risks to meet the needs of institutional investors. Both the SDR and investment labels will help unlock investor support for a market-led transition to a net-zero economy.
In our response, E3G emphasizes the following key priorities for the FCA:
- Alignment of the SDR and investment labels with the UK Green Taxonomy to provide a gold-standard, science-based definition on what economic activities and investments are green.
- Embedding transition plans within SDR disclosure to ensure firms across the economy have a science-based plan for net zero alignment.
- Alignment of the SDR with the sustainability disclosure regulations of the EU SFDR model at product and entity-levels. This will promote standardisation and clarity of sustainability disclosure requirements for UK firms operating in the EU and prevent organisations from overburdening organisations with reporting requirements.
- Development of common international disclosure standards through leveraging the UK’s influence in forums such as the IFRS Foundation’s International Sustainability Standards Board (ISSB). This will foster international alignment interoperability of sustainability disclosure standards.
E3G submitted a response to the Discussion Paper on 7 January. Read our response here.