Financial Institutions: Investment

Treasury written question – answered on 3rd October 2019.

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Photo of Preet Kaur Gill Preet Kaur Gill Shadow Minister (International Development)

To ask the Chancellor of the Exchequer, what plans he has to encourage financial institutions to adopt investment policies which consider (a) human and (b) labour rights.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The government is committed to enhancing the stewardship role of financial institutions, in particular asset managers. This includes their responsibility to monitor and actively engage with the companies they invest in and hold such companies to account on material issues.

The Financial Reporting Council (FRC) has consulted on a revised Stewardship Code which will set high expectations on institutional investors about how they allocate, manage and oversee capital on behalf of their beneficiaries and clients. Signatories will need to report on how they have considered material environmental, social and governance (ESG) factors, and how directors of the companies they invest in have applied section 172 of the Companies Act, in their investment and stewardship decision-making. The revised Code will be published later in 2019.

The Financial Conduct Authority (FCA) and the FRC have also published a joint discussion on paper on stewardship, which seeks to advance the debate about what effective stewardship should look like, what the minimum expectations should be for financial services firms who invest for clients and beneficiaries, the standards the UK should aspire to and how these might best be achieved. The discussion paper closed on 30 April and the FCA and FRC will publish a feedback statement later in the financial year 2019/20.

Government is also committed to ensuring that individuals are able to invest in line with their values and has supported the establishment of the Impact Investing Institute and the Green Finance Institute, which will aim to bring such investments into the mainstream.

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