Regulators plan sustainability disclosure rules for financial companies

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The Treasury and the Financial Conduct Authority (FCA) are working on requirements for businesses and investment firms to disclose sustainability information.

The move is part of the government’s work on using green finance to help the economy move closer to its goal of net zero carbon emissions by 2050.

It’s not clear if this would impact peer-to-peer lenders, but the Treasury said in a report released today (July 1) that consumers should be able to “quickly and easily” see the impact. environmental impact of their investments.

Read more: Confusion surrounds green finance despite growing demand

The document says the government will work with the FCA to introduce a sustainable investment label.

He said this would cover retail investments using information provided through separate regulatory work providing standardized sustainability labels.

Companies will also be required to disclose the climate and environmental risks and opportunities they face.

“This economy-wide scheme will cover real economy businesses, financial services companies and pension plans,” the report said.

David Bradley-Ward, founder of Ablrate, said sustainability labels are a good idea in principle.

“As with everything, the devil is in the detail,” he added.

“For example, how do you compare product versus product? Inevitably, doing it right will lead to a third party evaluation of a transaction, which will create additional cost and possibly timing issues.

“Besides, how far are you going?” In any investment, there is an impact that both parties can see differently. Take wind power, it’s obvious at first glance, but what about people who don’t want it in their neighborhood due to noise issues or environmental aesthetics, the impact on them is it not taken into account? “

He said he supported the sustainability of investments, but cautioned that this should not mean higher costs, lower returns or restricted access for investors.

Even if P2P lenders are not included, it is hoped that the creation of sustainable labels will stop the practice of “greenwashing”.

Read more: The ESG trend presents opportunities for P2P

This is where financial products claim to be climate friendly but are not as green as they claim.

“It is not known how this will affect investments in specific projects or companies, but it will certainly help the greenwashing problem when investments are made through diversified funds,” said Bruce Davis, chief executive of the bond platform. P2P Abundance Mass.

The release of a sovereign green bond in September and new green savings products from National Savings and Investments are also part of the Treasury’s work.

Davis said he had asked the government to consider additional channels for investors to participate in the issuance of green Treasury bonds, for example through P2P loans.

“While the initial goal is to use the existing NS&I platform, we hope that in the future the Treasury will consider ways in which crowdfunding of regulated investments can play a role in democratizing investments in green gilts, ”he said.

Treasury and FCA were invited to comment.


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