On 25 January 2023, ISLA submitted a response to the Financial Conduct Authority (FCA)’s consultation paper on Sustainability Disclosure Requirements (SDR) and Investment Labels.
The recent consultation paper follows the feedback provided in the 2021 Discussion Paper where the FCA asked for industry responses on the role of securities lending and short selling in the context of sustainable investing.
The following statement was made by the UK regulator:
“Securities lending plays an important role in the market and provides investors with additional income. We do not consider securities lending as being incompatible with ESG, as securities lending arrangements can be tailored to meet the ESG objectives of the lending and borrowing parties. So, we are not proposing any specific constraint to the ability of strategies that involve securities lending to qualify for one of the FCA sustainable investment labels. As part of our implementation guidance, we are proposing that, where applicable, a firm should clarify its securities-lending policy and the steps it takes to ensure this is coherent with its sustainable investment strategy.”
The FCA’s Consultation paper can be found here.
Andrew Dyson, ISLA’s CEO said, “We welcome these statements made by the UK regulator, and the Association looks forward to any future policy advice around the securities lending product.”
ISLA’s full response can be found here.