FCA launches open ESG committee 

26 August, 2022

The Financial Conduct Authority (FCA), which regulates the UK’s financial services industry, has launched an advisory ESG committee open to external members. 

The committee will work with the FCA board to address ESG issues and will host external stakeholders. 

https://twitter.com/TheFCA/status/1562020639187390465?s=20&t=1pXVDbQ7jO_Of4FJh608MA

The committee formation follows a move earlier this year from the UK government that the regulator must “have regard” for the UK’s commitment to reach net zero by 2050. 

Membership will include a small number of external experts with in-depth knowledge of ESG issues in the financial services sector.  

They will be appointed by the board in a personal capacity, and this will be in line with the FCA’s commitment to diversity and inclusivity.  

The committee will meet for the first time in the fourth quarter of 2022 and then on a quarterly basis onwards.  

This committee is being charged with providing the watchdog’s board with advice around three areas. 

This includes advising on relevant emerging ESG topics or issues, providing insight on how the FCA should execute oversight over ESG issues, and what the FCA’s ESG strategy should include.  

Like several financial services regulators, the UK’s FCA has become increasingly active on ESG issues. 

In December 2021, the regulator unveiled rules on disclosure requirements for UK companies. 

This was after it carried out a consultation to ensure disclosures are aligned with work from the Taskforce on Climate-related Financial Disclosures (TCFD).  

These rules require asset managers and owners – investment managers, pension funds, and insurance companies – to make annual disclosures that set out how they take climate matters into account when managing or administering investments on behalf of clients and consumers, as well as at the product level. 

The regulator has also been active in influencing how companies encourage DEI within their staff. 

From April 2022, UK-listed and regulated firms have been mandated to publish diversity disclosures in their annual reports.  

According to the watchdog, firms must have at least 40% women at the board level, at least one woman in an executive position, and at least one board member from a black or ethnic minority background, or explain their failure to comply.