FCA: ESG Benchmarks Have Potential for “Widespread Failings”

Following a review of ESG benchmarks, the FCA warned that poor-quality disclosures about methodologies and thresholds could contribute to greenwashing.

A preliminary review of ESG benchmarks and the quality of their disclosures has been conducted by the UK’s Financial Conduct Authority (FCA), with the regulator warning that these benchmarks have “potential for widespread failings”.

The FCA noted that a number of benchmark administrators failed to provide sufficient detail of the ESG factors that are considered within their benchmark methodologies and the thresholds used to measure them, with some also failing to apply their methodologies correctly.

The regulator said this could contribute to greenwashing, noting that its proposed new rules on greenwashing would also apply to benchmark administrators.

The FCA said: “We will be doing more work in this area to address the potential failings, and expect firms to be able to explain these strategies on request. We will use the full range of our tools where this does not happen.”

Read more articles like this on Regulation Asia’s sister publication, ESG Investor.

To Top
Share via
Copy link
Powered by Social Snap