FCA Publishes Discussion Paper on Sustainability-Related Governance

February 21, 2023

On February 10, the UK’s Financial Conduct Authority (FCA) published a discussion paper titled “Finance for positive sustainable change: governance, incentives and competence in regulated firms.” The paper considers whether regulated firms – which include banks, insurers and asset managers – should be expected to incorporate sustainability into their strategy along with the existing regulatory expectations of senior management as they carry out their firm’s climate transition plans. In referring to “sustainability,” the FCA makes clear it takes a broad view of that concept that goes beyond climate, stating that “attention is turning also to other – often inter-related – sustainability topics, such as human rights, diversity and inclusion, nature and biodiversity. There is increased scrutiny from investors and a demand for wider sustainability-related measures to be considered.” In this vein, the FCA also referred to ISSB comments that “‘sustainability is a condition for a company to access over time the resources and relationships needed (such as financial, human, and natural), ensuring their proper preservation, development and regeneration, to achieve its goals.’”

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