Bodies employed to measure enterprises’ performance for environmental, social and governance (ESG) will now face penalties if they do not improve their disclosures to investors. The warning was recently issued by the financial watchdog of Britain, the Financial Conduct Authority (FCA).
Regulators in the UK are now tightening these ESG rules with the aim of cracking down on a recent trend known as greenwashing where firms make inaccurate claims of being climate-friendly to attract new investors.
Ethical investors in Britain with concerns about the ESG performance of companies they are keen to acquire assets in often look for financial advice in Shropshire, Cheshire, and other counties. Among the wide range of services that wealth management firms provide is portfolio management and teams help clients to collect assets that suit their stance on environmental and social issues.
The ESG benchmarks are specific scores employed for measuring the progress of financial products that markets and companies are striving towards achieving a net-zero economy.
In a recent letter sent to compliers of ESG benchmarks, the FCA stated that after a provisional review it had found that the level of disclosures to be poor.
The FCA letter commented:
“Given the importance of ESG benchmarks and our initial supervisory findings, which indicate the potential for widespread failings, we will be doing more work in this area across the portfolio.”
In many cases, the UK financial watchdog discovered that compilers didn’t provide adequate description and detail of ESG factors considered within their methodologies.
