FCA proposes major overhaul of green investment products
The UK's financial services watchdog, the Financial Conduct Authority, has put forward proposals to drop the 'sustainability' and ESG labels from investment products in a major overhaul of the way the City looks at green finance propositions.
The proposals mean about two thirds of all ESG-labelled investment products could be banned from claiming to adhere to net zero, ESG or ethical principles.
In a radical overhaul of the current regulatory framework, the regulator proposes to introduce a labelling system with three types of green funds.
Firstly, 'sustainable focus funds' will have invest at least 70 per cent in entities, vehicles or government bonds that meet "a credible standard of environmental and/or social sustainability."
Moreover, so-called 'sustainable improver funds' will target investors wishing to improve companies by taking ownership, the watchdog said in a newly released document.
These investment vehicles must clearly set out where the plan to invest, and what their policies are to improve or change the company that is targeted.
Finally, so-called 'sustainable impact funds' will be investment vehicles that aim to attract investors wishing to drive changes in society and the environment.
The FCA said final proposals, following a consultation, will be published at the end of June.