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FCA urges fund managers to improve quality of ESG data

Nick Miller, Head of Asset Management Supervision at the UK‘s Financial Conduct Authority (FCA), has recently criticised the quality of ESG data disclosed in an open letter (link) to the boards of UK-licensed fund providers.

Miller emphasises in a nine-page letter released July 19, that ESG and sustainable investment funds are currently the fastest growing segment in the European fund market – and in view of the growing range of products, he urges that the quality of information and how this is disclosed must be improved for the sake of investor protection.

To achieve this goal, the FCA has proposed guiding principles for compliance, largley based on the EU’s SFDR. According to these principles, the provider must ensure that the type of sustainable investment strategy is clearly published for each fund; both in the pre-contractual documents (e.g. in the prospectus), and on an ongoing basis.

The guiding principles are designed to be compatible with the planned UK regulation on the disclosure of sustainability information, as well the TCFD regulations.

The FCA has also reminded the industry that “ESG/sustainability-related information in a key investor information document should be easily available and clear, succinct and comprehensible, avoiding the use of jargon and technical terms when everyday words can be used instead.” This includes documents that fall under UCITS (KIID) and PRIIPs (KID) regimes.

All UK authorised funds and their managers will be affected by the guidance.

With acarda’s Software-as-a-Service solution, you can now produce FCA and SFDR compliant factsheets for your ESG funds, in line with the required levels of quality and clarity. We collect the necessary data and generate reports according to the regulatory requirements. The flexible system can also be quickly adapted to upcoming SFDR disclosure requirements.

With the acarda ESG SFDR Module you can centrally:

  • Manage ESG reference data of the portfolios across strategies and any exclusions
  • Collect index, ESG and PAI data from ESG data providers
  • Collect ESG look-through data for target funds
  • Provide all required information to portfolio management teams
  • Calculate and aggregate the required portfolio and ESG information
  • Prepare ESG factsheets and prospectuses according to regulatory requirements
  • Produce SFDR-compliant documents today
  • Extract ESG portfolio data in EET standard format for other invested funds

For more information, please contact us. We will gladly advise you on best-practice approaches for data management and the production of compliant ESG reports.

Press contact
Jessica Schreiner

Phone:+49 15 25 47 62 361
Email: jessica.schreiner@acarda.de

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