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UK financial watchdog establishes new ESG advisory committee

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In 2022 the UK’s Financial Conduct Authority (FCA) agreed to establish a new ESG Advisory Committee to help execute its ESG-related responsibilities. The FCA has now announced its initial members following its launch in August 2022.

  • The FCA is responsible for ensuring that relevant markets work well and, as concern rises about the impact of ESG on financial performance, the FCA is looking to thread awareness of ESG implications throughout its work.
  • Without having a mandate for ESG at board level, corporates are deemed to not be serious about ESG so it is important to see the FCA follow suit.
  • The ESG Advisory Board is to provide independent oversight into the FCA’s approach to ESG issues and the development of its ESG strategy.

The FCA’s 2022 commitment included meeting the Government’s expectation that it should  ‘have regard’ to the UK’s commitment to achieving a net zero economy by 2050, when considering how to advance and achieve its objectives and functions.

The FCA approach to integrating ESG into financial oversight

The FCA said that it has already delivered a considerable amount of work in line with the priorities set out in its existing ESG Strategy, which was updated in November 2022. The FCA appointed its first ESG director in 2021 and it is building its strategy around five core elements:

  • Transparency – promoting transparency on climate change and wider sustainability along the value chain
  • Trust – building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem
  • Tools – working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts
  • Transition – supporting the role of finance in delivering a market-led transition to a more sustainable economy
  • Team – developing strategies, organisational structures, resources and tools to support the integration of ESG into FCA activities

Steps that the FCA has taken so far include publishing proposals for measures aimed at clamping down on greenwashing, the formation of a group to develop a voluntary Code of Conduct for ESG data and ratings providers, as well as active monitoring of ESG-related business by firms and a review of climate disclosures by listed companies.

In a statement the FCA also said: “We have also been an active participant in the Government’s Transition Plan Taskforce, helping to develop a draft framework and guidance for the design of transition plans.   As our work continues to progress, the committee will support the Board in executing oversight of ESG-related issues relevant to the FCA as a corporate entity and as a regulator.  ”

Additionally, the Committee will provide guidance to the Board on relevant emerging ESG topics or issues and views on how the FCA should develop its ESG strategy in keeping with the organisation’s statutory objectives and regulatory principles.

Members of the FCA’s new ESG board include

  • Tom Gosling, Executive Fellow in the Department of Finance at London Business School and Executive Fellow at the European Corporate Governance Institute
  • Catherine Howarth OBE, Chief Executive of ShareAction
  • Tim Mohin, former Chief Sustainability Officer for Persefoni AI and formerly Chief Executive of the Global Reporting Initiative
  • Desiree Fixler, Founder of RYSN Consulting and Chair of VentureESG
  • Sonali Siriwardena, Partner and Global Head of ESG at Simmons and Simmons
  • Harald Walkate, Senior Fellow at the Center for Sustainable Finance & Private Wealth (CSP) at the University of Zurich

The Committee will also include the FCA’s Chair, other Non-Executive Directors and the Director of ESG.

Members have been appointed by the Board in a personal capacity and will abide by a conflict of interest policy.

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