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Ratings and labels are not only for our groceries and homes, but also for our finances as well. They help us figure how to best invest our money. Now, the UK’s financial regulator has introduced a new scheme that intends to help people invest wisely.
The Financial Conduct Authority’s (FCA) has rolled out its first sustainable financial investment labeling routine. This is part of the UK government’s broader plan for sustainability, which includes the creation of a green taxonomy for UK companies to measure their sustainable goals.
Europe already has several labeling plans for investors, with France leading the way. These initiatives are aimed at ensuring that financial markets become more sustainable and the world remains on track to limit climate warming to 1.5 ° C. We’ve discovered that this is an innovative way for governments to help investors address their sustainability concerns.
But the UK’s new scheme isn’t without its challenges. It will offer four sustainable labels to help consumers make informed investment decisions. This program is particularly interesting because it has learned from the shortcomings of Europe’s Sustainable Finance Disclosure Regime (SFDR).
Some market players have taken advantage of SFDR as a marketing opportunity, resulting in confusion and false claims. As a result, the European Commission has announced a new review of the SFDR.
