By Victoria McCarron

On 10th February, the FCA published a discussion paper (DP23/1) on finance for positive sustainable change.

DP23/1 supports the FCA’s intention to encourage an industry-wide dialogue on firms’ sustainability-related governance, incentives and competence.

It emphasises the role of the financial sector in driving sustainable long-term goals within the wider economy.

DP23/1 is split into two parts:

• Part 1, which covers how governance, incentives and competence are considered in the Task Force on Climate-Related Financial Disclosures’ recommendations and evolving expectations in these areas. It also considers firms’ sustainability-related objectives and strategies and how these are supported by their governance and incentive arrangements, including reflecting on how asset managers and asset owners organise and govern their stewardship activities to influence positive change. Finally, it covers the training and competence of firms as well as summarises next steps.
• Part 2, which consists of FCA commissioned articles by industry experts and academics offering perspectives and analysis on firms’ sustainability related governance, incentives, competence and stewardship arrangements.

The FCA has asked for comments to be submitted on this paper by 10th May 2023. The FCA will use these comments to consider how to support the industry in this field and whether there is a case for further regulatory measures in the area of firm governance, incentives and competencies.  

DP23/1 was accompanied by a blog by Sacha Sadan, the Director of ESG for the FCA, which reiterates the importance of the financial sector’s role in influencing positive sustainable change.

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