[Re: FCA poised to clampdown on greenwashing with ‘ESG’ curbs, yesterday]
The FCA has spoken. UK firms must walk the walk, and not just talk the talk on ESG. Firms now require a variety of different data points, multiple ESG data sources for those data points where available, and their own analytical capability to digest that data to prevent greenwashing and mislabelling. For funds, this will demand transparent, documented processes and procedures backed by data and analytics that are fully defensible.
The difficulty of getting consistent, standardized ESG data, will take time to be remedied by regulators and industry groups. In the meantime, ESG data providers and ratings agencies will have to revise products while considering how to align their proprietary methods with new frameworks and taxonomies.
This predictable evolution of ESG data sources and requirements will mean financial firms will face ongoing change in ESG data management and related business processes over the coming years
As it stands, investors and funds must do their own fact-finding to ensure there’s no greenwashing going on within their ESG investments. And with all these issues in play, the financial services industry has a lot of work to do in the next few years to get a handle on ESG data challenges.