Fortnightly News Blog – 10th May 2022

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REGULATION/CONSULTATION

ESMA on cost and product disclosure changes

Europe’s markets watchdog has put forward plans to overhaul fund managers’ cost and product disclosures, drawing inspiration from the regulation for packaged retail investment and insurance-based products. Ignites Europe reports here,

Sustainability reporting standards

No longer do we need to lament a lack of standards to guide firms on sustainability disclosures, like the proverbial bus we’ve been waiting for, three have arrived in quick succession in recent weeks:

  • The European Financial Reporting Advisory Group has set out draft sustainability disclosure standards for public consultation here, open until August this year. The norms will be used by listed companies across the EU to implement mandatory ESG disclosure requirements under the bloc’s new Corporate Sustainability Reporting Directive. Reuters reports here, including a comparison with other standards.
  • In April, the International Sustainability Standards Board (ISSB) published similar draft standards, seeking to pull together many disparate strands across the world. See here for a brief video explaining the background to the standards and the full details here (responses required by July).
  • The U.S. Securities and Exchange Commission has also set out draft disclosure rules, reported in Reuters here.
 

Outsourcing oversight

The clock’s ticking for firms to meet new outsourcing rules in Europe. Luxembourg’s Commission de Surveillance du Secteur Financier’s circular comes into force in June, closely following the European Banking Authority‘s own guidance, but broader in scope, capturing investment firms and management companies. The Central Bank of Ireland issued similar guidance here at the end of 2021, with firms expected to notify the regulator of planned critical or important outsourcing arrangements, or material changes to existing arrangements, by the end of June. Reported in Ignites Europe here.

FCA consultation on Russia

The Financial Conduct Authority (FCA) has opened a consultation into rules that would allow UCITS and non-UCITS retail schemes to side pocket assets affected by the Russian invasion of Ukraine and associated sanctions. Investment Week reports here, and the FCA’s CP 22/8 can be read here. You’ll need to be quick to respond as the deadline is 16 May.

 

ESG

Additional SFDR criteria

EU policymakers are to develop additional sustainability disclosure requirements for asset managers as concern grows over greenwashing by the funds industry. Ignites Europe has the story here.

Lifting the lid on ESG returns

A Harvard Business Review article reports here on ESG investing with some challenging findings on financial returns, risk and ESG performance, with additional citations here.

BlackRock’s shot across the (rain)bows

BlackRock warns it will vote against more climate resolutions this year. Even if the reality is more nuanced, it is sobering to see how some climate change action/ disclosure initiatives may not get shareholder support in the future. Reportage here in the Financial Times (FT).

Not ad-ding up

The UK advertising watchdog, the Advertising Standards Authority is to warn HSBC about using adverts to greenwash its reputation and order it to be more transparent about its contribution to climate change, in a ruling that could have wide implications for financial sector marketing. The report here in the FT.

ESG in everything

A thoughtful piece on the need for ESG investing to cover the full spectrum of companies and not just include the ‘green’ ones. Citywire reports here.

In case you missed it

FBC Digital Meeting: AFMs and Responsible Investment

 

FBC senior adviser Brandon Horwitz was recently joined by the FCA’s Mark Manning, Technical Specialist, Sustainable Finance and Stewardship, and Claudia Chapman, Head of Stewardship at the Financial Reporting Council in a very well received discussion on what fund managers can and should be doing about Responsible Investing.

 

For FBC members only. View the full recording here.

PEOPLE

FCA hires

The Financial Conduct Authority has made three senior hires, as the organisation said it has recruited over 250 employees this year as staff turnover returns to pre-pandemic levels. Investment Week has the story here.

Tilney appoints CEO for fund admin business
Tilney Smith & Williamson has appointed Neil Coxhead as chief executive officer of its host authorised corporate director and fund administration business. Money Marketing reports here.

 

OTHER NEWS

Blissful ignorance

One in five advisers have not heard of the new Consumer Duty and have not considered the level of change they may need to make, according to research by mutual insurer Royal London. Money Marketing reports here.

KPMG study on Lux ManCos

A review of the operating model to achieve scalability. Read here.

Diversity

Think tank and advocacy group City Hive has launched ACT (Action, Challenge, and Transparency), a standard that looks to create cultural change and drive diversity and inclusion (D&I) in investment firms. Reported on in Investment Week here.

Meanwhile, has resistance to board diversity accelerated? Recruiter Korn Ferry explores here.

Several of the news outlet cited in this blog require registration or subscription. Also, FBC takes no responsibility for the accuracy or quality of the news in the links provided above, and nor are the views and comments representative of FBC or its members, unless expressly stated. Content stored on the FBC portal is freely accessible for FBC members.

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