All the pieces of the conduct puzzle: Governance, culture, D&I, innovation
Digest:
- “The FCA expects senior leaders to nurture healthy cultures in the firms they lead. Cultures that are purposeful. That have sound controls and good governance. Where employees feel psychologically safe to speak up and challenge. Where remuneration does not encourage irresponsible behaviour that can ultimately damage the business and wider markets.”
- Through Firm and Portfolio Assessment Models, FCA supervisors look at “purpose, leadership, governance and the approach to people. This includes diversity and inclusion (D&I) as well as psychological safety”.
Source/Context:
“From Zeroes to Heroes: How culture in financial services can change for everyone’s benefit”
In a speech on 28.11.22, the FCA said that: “[the] Consumer Duty... will do the most to address conduct – and therefore culture ...
We have asked firms to think about what a good outcome would be for their customers ... We have also asked that the thinking starts at board level and have requested that there is a consumer duty champion on every board.
The reason is simple: the Duty challenges you to ask significant questions about your purpose.”
“One of the most direct ways managers and leaders can shape culture from the start – and spot when it needs changing – is through language ... the boss and those at C-suite level set the tone for culture.”
What does this mean for the FS and other industries?
The FCA also said that “one of the issues we get the most questions about is the future rules around environmental, social and governance (ESG) products and promotions.
There is – rightly – always a major focus on the E and S part of ESG. But perhaps less so on the g – or governance.
We are looking closely at what support firms offer to employees to improve their culture so that it boosts the conduct of their business or function.”
D&I “can lead to unique insights that can fuel more innovative approaches, greater efficiency and reduced misconduct ...diversity of thought can foster innovation.”
The FCA has “recently completed a study [“Understanding approaches to D&I in the FS industry‘, [which] will be published shortly”] into D&I across a range of organisations and found that firms were focused on improving representation at senior level but this dropped off at mid and junior level.”
Contents
- ESG in 3D, December 2022
- COP15: The most important unknown summit?
- Long live king coal?
- Code of Conduct for ESG data and ratings providers
- Voluntary offset markets for carbon – a bad atmosphere?
- ‘Decentralised and autonomous’ – evolution or misunderstanding of unincorporated association law?
- Additional matters
Related expertise
You may be interested in...
Legal Update
What’s in a name: ESG principles and UK local authorities
Legal Update
Environmental crime and the impact for insurers
Legal Update
Turtles, treaties, and takeaways: Navigating supply chain issues for sustainable packaging
Legal Update
Organisational approaches to ESG and sustainability matters
Legal Update
How might AI impact insurer climate targets?
Legal Update
Future-proofing real estate: The rise of green leases
Legal Update
What does the election mean for Net Zero and the green ambitions of public bodies?
Legal Update
Final FCA anti-greenwashing rule guidance published
Legal Update
Veganism and manufacturing: Plant based diets, environmental sustainability and the future of farming sustainability
Legal Update
ESG and the path to net zero: Construction industry considerations
Legal Update
COP28 – key outcomes agreed and what they mean for you
Legal Update
Climate change related insurance decisions being made around the world
Podcast - ESG in 3D
The ESG podcast: topics for business and government
Legal Update
AI modelling biases in quote engines
Legal Update - ESG in 3D
ESG in 3D - April 2023 (Edition 2)
Legal Update - ESG in 3D
ESG in 3D - April 2023 (Edition 1)
Published Article
ClientEarth claim may expand scope of directors' duties
Legal Update - ESG in 3D
ESG in 3D - March 2023 (Edition 3)
Legal Update - ESG in 3D
ESG in 3D - March 2023 (Edition 2)
Legal Update - ESG in 3D
ESG in 3D - March 2023 (Edition 1)
Legal Update
Browne Jacobson collaborates with the University of Nottingham on EDI survey in the UK insurance market
On-Demand
Future of Care: Retirement living webinar
Legal Update
Green Leases for the NHS
On-Demand
Environmental, social and governance (ESG) in the context of retirement living
Legal Update
Code of Conduct for ESG data and ratings providers – bridging the authenticity gap
Legal Update - ESG in 3D
ESG in 3D, December 2022
Legal Update
COP15: The most important unknown summit?
Legal Update
Long live king coal?
Legal Update
Code of Conduct for ESG data and ratings providers
Legal Update
All the pieces of the conduct puzzle: Governance, culture, D&I, innovation
Legal Update
Voluntary offset markets for carbon – a bad atmosphere?
Legal Update
‘Decentralised and autonomous’ – evolution or misunderstanding of unincorporated association law?
Legal Update - ESG in 3D
ESG in 3D, November 2022
Legal Update
Investors groups are calling for action from the Government
Legal Update
The FCA’s anti-greenwash proposals
Legal Update
Floating offshore wind pipeline potential
Legal Update
Investment Zones on hold?
Legal Update
Lloyds becomes first UK bank to halt new oil and gas funding
Legal Update
Environmental Act 2021 – statutory requirement to submit targets not complied with
