The FCA has declared their expectation that Authorised Fund Managers adhere to their ESG / Sustainable Investment principles on an “ongoing basis”.
Applicable for new (or repurposed) funds submitted for authorisation, the FCA’s principles include Pre-contractual and ongoing periodic disclosures on responsible or sustainable investment funds.
Key considerations cited include “a fund’s ESG/sustainability focus to be made easily available to consumers in relevant regulatory documents and marketing materials in a clear, fair and not misleading way”, i.e.
- UCITS KIID or PRIIPS KID (contrary to EU-SFDR) alongside the prospectus
There is also a need for firms “to take appropriate steps” in their ongoing performance reporting to make information available on how well a fund is meeting its stated objectives (i.e. intended ESG/sustainability characteristics, themes or outcomes) on an ongoing basis.
These new UK-ESG disclosure principles are included in guidance addressed to chairs of Authorised Fund Managers [AFMs] on Monday. This follows the FCA observation of “numerous applications for authorisation of investment funds with an ESG or sustainability focus… poorly drafted… below our expectations“.
The FCA state “we expect to see material improvements” in AFMs “submitting fund applications and in managing funds on an ongoing basis”.