FCA Responds to CMA's Environmental Sustainability Guidance: A Pledge to Collaborate

On October 12, 2023, the Competition and Markets Authority (CMA) took a significant step in the realm of environmental sustainability by publishing its "Guidance on the application of Chapter I of the Competition Act 1998 to environmental sustainability agreements," commonly referred to as the 'CMA's environmental sustainability guidance.' This directive marks a substantial stride toward fostering sustainability in economic activities and partnerships.

What makes this development even more noteworthy is the Financial Conduct Authority's (FCA) prompt and cooperative response. Under section 234J of the Financial Services and Markets Act 2000, the FCA holds concurrent powers to enforce competition law within the financial services sector. With a forward-looking perspective, the FCA has pledged to closely consider the CMA's environmental sustainability guidance while exercising its concurrent competition powers.

The FCA's commitment to promoting sustainability and environmental, social, and governance (ESG) priorities is not new. In November 2021, the FCA unveiled a comprehensive strategy geared towards bringing about positive change in the arena of ESG. This commitment to ESG-related goals has continued to evolve, with a particular focus on issues related to competition. This inclusive approach has seen the FCA actively engage with industry stakeholders and the CMA, recognizing the pivotal role of collaboration in effectively addressing ESG-related challenges.

One of the central principles behind this collaboration is the acknowledgment that cooperation among industry participants, as well as between the industry and government/regulators, is vital in successfully tackling ESG challenges. The FCA views this as an opportunity to work in synergy with various stakeholders to address emerging sustainability concerns.

The FCA also encourages stakeholders to bring to its attention any uncertainties or concerns related to ESG initiatives that might be novel or significant. In such cases, the FCA commits to evaluating whether clarification is needed, regulatory actions are warranted, or if it should direct inquiries to and collaborate with the CMA. This stance underscores the FCA's dedication to ensuring transparency and addressing potential issues that may arise in the context of sustainability.

The CMA's comprehensive guidance on environmental sustainability has been warmly received by the FCA, reflecting a united front in their commitment to drive sustainable practices and positive change. The FCA's pledge to continue collaborating with the CMA in this domain is a clear indication of their shared vision for a more sustainable and environmentally responsible future.

As the financial services sector and regulatory authorities join forces to promote sustainability and address ESG challenges, this collaborative effort is expected to have a far-reaching impact on businesses, consumers, and the environment as a whole. The FCA's commitment to considering the CMA's guidance in its enforcement of competition law reinforces their dedication to fostering a more sustainable and responsible financial ecosystem.