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Shifting Sands

21/10/2019

The ESG and sustainability story is moving at such a speed these days. The last couple of weeks alone have seen a number of gusts shifting the sands of the sustainable investment landscape.

The FCA poked its head up over the dunes, outlining its action plan on climate change and green finance for this quarter and 2020 in a Feedback Statement. Asset managers: expect scrutiny of your sustainable funds as the regulator aims to weed out greenwashing, further guidance on stewardship, and better climate change-related disclosure from issuers. The statement also gives a nod to the EU Sustainable Finance Action Plan, a fairly sweeping initiative which includes proposed amendments to suitability rules, requiring pension providers and retail intermediaries to take account of ESG preferences in suitability assessments.

If FCA efforts represent the stick, Government ones may well provide the carrot. At SRI Services & Partners’ annual event during Good Money Week (5th-11th October), UKSIF’s Simon Howard signalled that the Treasury is, at the very least, receptive to the idea of aligning carbon net zero targets with government spending priorities.

Meanwhile, Extinction Rebellion protestors have taken to the streets. Whether you agree with their methods or not, their disruption and defiance make their cries of climate emergency impossible to ignore. It is hard to forget the image of grannies and rabbis being dragged from their sit-in protests in a hurry.

And just on the horizon, we see the blurred outline of the UK’s new Environment Bill coming into focus, with a raft of environmental protections aimed at improving air quality, restoring wildlife and reducing plastic waste. Given the Conservative Party’s historical voting record on climate change-related legislation, the passing of this bill would mark a significant policy shift.
Yes, we are still a nation that fracks, a nation that seems intent on expanding airports. But the prevailing winds are for a more sustainable economy.

Sustainability nay sayers: you can no longer bury your heads in the sand.

Annalise Toberman, Head of Insight

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