The Financial Conduct Authority (FCA) is being urged to ensure new rules on sustainability disclosures for investment products are fit for the modern age.
The City watchdog launched a discussion paper in November that sought views on potential criteria to classify and label environmental, social and governance (ESG) investment products to help investors make more informed decisions.
Responding to the discussion paper, fintech trade body Innovate Finance said while many of its members are outside of the regulator’s scope, they could provide tools to record data in an accessible format so it can be read and understood by all firms and investors.
“Innovate Finance considers that greater access to data will be critical to the success of the transition to a net zero economy, and we would call on the FCA to work with other regulators and government to build on facilitating access,” Innovate Finance said in its response to the discussion paper.
It suggested making climate risk or carbon footprint disclosures accessible and technology-led rather than being stored on spreadsheets could make it easier to monitor and unlock opportunities for innovative products using the data.
“The underlying aim should be to drive the production of high-quality datasets, which is central to assurance and the development of new, innovative products, while ensuring reporting is not overly burdensome to firms,” the response said.
“Our members consider that data from all market participants – be they small, medium or large firms – is essential in order to drive impactful change.
“To that end, the FCA’s approach to incentivising the move to innovation-led reporting needs to provide sufficient lead time to small and mid-size firms, enabling them to prepare and invest in reporting-related solutions.”