Legal & Regulatory News

FCA publishes letter including guiding principles on the design, delivery and disclosure of ESG and sustainable investment funds

On 19 July 2021, the UK Financial Conduct Authority (FCA) published a letter addressed to authorised fund managers (AFMs) outlining the FCA's expectations on the design, delivery and disclosure of ESG and sustainable investment funds (the Letter). The Letter stresses the importance of ensuring that funds marketed with a sustainability and ESG focus describe their investment strategies clearly and that any assertations made about their goals are reasonable and substantiated. In the Letter, the FCA refers to a number of applications received by it for such funds which do not bear up to scrutiny.

The Letter includes, in the Annex, a set of guiding principles (the Guiding Principles) which aim to help AFMs comply with existing requirements by ensuring that fund disclosures accurately reflect the nature of the fund's responsible or sustainable investment strategy in both pre-contractual documentation (for example, the prospectus) and on an ongoing basis. The Guiding Principles are also intended to allow AFMs to deliver on their funds’ stated objectives and strategy and to provide sufficient information to enable consumers to monitor whether their expectations are being met.

Click here to access the Letter and Guiding Principles.