ESG round-up: UK to consult on extending SDR to overseas funds

The latest developments in sustainable finance: AMNT backs standardised vote reporting legislation; Aussie financial watchdog expects boards to engage with all sustainability claims.

The UK government has confirmed plans to consult on whether the country’s sustainability disclosure regime (SDR) should be extended to overseas funds. In a statement on Tuesday on an equivalence decision for the EU market, Treasury minister Bim Afolami said the government “intends to consult on whether to broaden the scope of SDR to include funds recognised under the [overseas funds regime]” but would give managers “adequate” time to adapt to any new requirements. Jonathan Lipkin, director of policy, strategy and innovation at the Investment Association, said the group looked forward to engaging with the government on the consultation.

The Association of Member Nominated Trustees (AMNT) has backed legislation that would mandate standardised vote reporting by asset managers to pension schemes. An amendment to the Digital Markets, Competition and Consumers Bill, backed by voting and stewardship fintech Tumelo, would require the Financial Conduct Authority to implement rules under which investment managers and insurers would have to give standardised information on all votes relating to their investments to occupational pension schemes, personal pension providers and the LGPS within 30 days of receiving the request.

Australian financial watchdog ASIC’s deputy chair Sarah Court has said greenwashing will remain a key focus for the regulator. In a speech today (Thursday), she also said ASIC expects boards to engage directly on all sustainability claims, including aspirational statements, targets, active stewardship and commitments, and investment descriptions. ASIC’s greenwashing work will not be confined to “misleading and deceptive” cases, but licence obligations, directors’ and officers’ duties, and a range of other obligations could also apply, she said, adding that environmental, social or ethical claims made by trustees will need to be backed with evidence and be transparent about their basis.

Australian banking regulator APRA has updated its interim policy and supervision priorities for 2024, maintaining its focus on mitigating climate risk. The regulator said it is reviewing the effectiveness of climate change financial risks prudential practice guide, with a focus on embedding climate risk considerations in risk management frameworks. It plans to consult on these changes with the industry. APRA will also ask entities to respond voluntarily to its climate risk self-assessment survey, to assess the maturity of climate risk management.

The Australian Sustainable Finance Institute (ASFI) has published its strategy for 2024, which covers enabling sustainable finance, finance sector leadership, natural capital, First Nations and finance, and sustainable finance solutions. The topics represent a continuation of ASFI’s work from last year and the ongoing implementation of Australia’s sustainable finance strategy, as well as the taxonomy work ASFI is overseeing.

The Workforce Disclosure Initiative has been transferred from its founder ShareAction to the Thomson Reuters Foundation. The initiative was launched in 2016 to collect data that is voluntarily disclosed by companies wanting to improve transparency and action around business impact on human rights, accessible to institutional investors which want to make investment decisions based on responsible business practices.

The Finance for Biodiversity Foundation (FfB) has extended by two years the window for implementing its five pledge commitments for new signatories. Currently, the FfB pledge is signed by 163 financial institutions from 25 countries, with €21.7 trillion in combined assets. The first group of financial institutions had committed to report on their commitments in 2025. Financial institutions that sign the pledge in 2024 will need to report in 2027. The new signatory round deadline is 1 March.