What next for Authorised Fund Managers (AFM’s) and responsible investment? 

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Over 40 people attended the second FBC round table in our Environmental, Social and Governance (ESG) investing series, held on 7 March 2022. The focus was on what Authorised Fund Manager (AFM) boards should be doing next when it comes to Responsible Investment (RI). 

The discussion opened with insights from the chair Brandon Horwitz, FBC Senior Adviser and our panellists Claudia Chapman, Head of Stewardship at the Financial Reporting Council (FRC), and Mark Manning, Technical Specialist focused on Sustainable Finance and Stewardship at the Financial Conduct Authority (FCA). 

Brandon opened the discussion by sharing some insights from a pre-event survey of fund board directors and professionals. These included how often RI features at fund board meetings, whether RI is considered only for ESG funds or across all funds and who is responsible for overseeing RI/ESG activities within funds.  

Claudia shared some background to the FRC’s Stewardship Code, including how it applies not only to asset managers and asset owners, but also to service providers like investment consultants, proxy advisers and ESG data providers. Claudia also shared insights as to what the FRC look for when assessing applications from organisations to become a signatory to the Stewardship Code.  

Mark shared insights including how greenwashing presents a risk to confidence in the market and the much-needed flow of capital to help secure net zero and a more sustainable future. He recapped on the requirements set out in the FCA’s Dear Authorised Fund Manager (AFM) Chair letter in July 2021. Mark also highlighted what the FCA expect from fund board chairs and directors when it comes to ESG funds.  

We heard about the FCA’s planned supervisory work in 2022 as well as the direction of travel for consultations due this year, including the upcoming one on Sustainability Disclosure Requirements (SDR) expected in mid-2022.  

The round table discussion included a range of questions including considering the FCA’s views on the role of Senior Management Function holders and ESG, fiduciary duties and whether the FCA would ever prescribe one particular ESG framework.  

FBC will be running future events, including considering the FCA’s planned publication in mid-2022 of their consultation on detailed policies and rules relating to Sustainable Disclosure Requirements and investment labelling. FBC also undertaking research to identify good practices when it comes to overseeing ESG funds (and funds which integrate ESG features). 

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