FCA stresses importance of governance in transition plans
The comments, made at Net Zero Investor’s annual conference, follow the UK regulator’s recent proposal of an ESG code of conduct.
Tim Rowe, manager for strategy and coordination in the ESG division of UK regulatory body the Financial Conduct Authority (FCA), has stressed the ‘G’ in ESG as a top priority for firms if they are to achieve their net-zero goals.
Speaking at the inaugural Net Zero Investor conference, hosted at the London Stock Exchange, Rowe said: “The FCA has found repeatedly with ESG issues, if you haven’t got the governance right, if you haven't got people in the right place from a cultural point of view, these things don't work so well.
“Having the right governance framework in place is hugely important to the delivery of a transition plan.”
Rowe emphasised that the FCA was keen for its proposed ESG code of conduct to adhere to wider international standards, in particular those that have been recommended by the International Sustainability Standards Board (ISSB).
In March this year, the ISSB proposed both general sustainability-related disclosure requirements and climate-related disclosure requirements.
Having the right governance framework in place is hugely important to the delivery of a transition plan
TCFD and transparency
Of the FCA’s first ever Taskforce on Climate-Related Financial Disclosures (TCFD) report, which was published in July of this year, Rowe said: “[The report] spurred considerable internal action. It made us think, do we want to disclose the way the organisation looks internally right now, or do we want to make improvements before this report goes out and actually present something that we can be genuinely proud of?
“With this in mind there has been a lot of work done within the FCA to improve ourselves by virtue of shining a spotlight on ourselves. We see transparency as a way not just getting information out to people, but also spurring change.”
Rowe also expressed optimism that the UK Treasury would grant the FCA the power to regulate ESG data providers, and that the authority was engaging with the UK central government with this aim in mind.
