Crowdstacker’s chief executive has given his backing to the use of sustainability labels on its crowd bond projects.
The Treasury and the Financial Conduct Authority (FCA) are working on requirements for businesses and investment firms to disclose sustainability information using environment, social and governance (ESG) labels.
It is unclear if this will apply to peer-to-peer lenders but Karteek Patel (pictured), chief executive of Crowdstacker, said he would support such a move.
“Crowdstacker is very interested in ideas surrounding ESG transparency for P2P investments, and would be keen to get involved in, and support, any government directives to provide an ESG-style disclosure for the types of investments we offer,” he told Peer2Peer Finance News.
“Investor motivation to include consideration of environmental, social and governance issues as part of their investment picking process is growing so of course it makes sense to activate this in what we do when and where we can.”
Read more: ESG trend presents opportunities for P2P
He warned there are still some barriers to overcome to create a clear ESG framework.
“The ultimate success of this process would lie in an industry-wide ability to provide a universal scale for accurate measurement, as well as providing a fair and easy to understand comparison model – both challenges which are yet to be overcome even in the broader investment arena,” Patel said.
“Of course, investors always want good investments so simply meeting high ESG standards will not be enough.
“Ultimately asking more of businesses can only be a good thing. The world around us is changing, hopefully for the better, and we are keen for our platform to be a part of this. But the change has to be genuine, fair and meaningful.”
Crowdstacker raised £1m last year for a project with Prime Agri, which provides funding for agricultural, horticultural and rural small businesses with a focus on renewable energy.
Patel said the platform’s green investments typically attract higher sums.