FCA Speaks to Banks Amid Concerns About Sustainable Loans

The UK Financial Conduct Authority is examining the market for sustainable loans amid concerns that environmental targets are too easy for companies to meet.

(Bloomberg) — The UK Financial Conduct Authority is examining the market for sustainable loans amid concerns that environmental targets are too easy for companies to meet.

The FCA is speaking to players in the market about loans that potentially reward borrowers with lower rates but fail to have a significant environmental impact, according to a person familiar with the matter who isn’t authorized to speak publicly. The conversations with bankers and borrowers are informal and at an early stage and the regulator is yet to decide on next steps, the person said.

The news was first reported by the Financial Times.

The UK’s Green Technical Advisory Group — a government-appointed expert panel — said earlier this year that the nation risks falling behind both the EU and US as they pursue ambitious regulatory and subsidy programs. 

Last month a group of lawmakers said the UK should pursue a national ESG strategy to simplify rules and reduce the risk of greenwashing. Overstated environmental claims will thrive without common standards, frameworks and disclosures that are suitable for smaller businesses as well as large conglomerates, a report from the All-Party Parliamentary Group on Environmental, Social and Governance said at the time. 

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