How do the FCA’s cross-cutting and category specific work together to meet the SDR requirements?

The FCA's approach to Sustainable Development Goals (SDGs) involves both cross-cutting measures and category-specific measures, each with a different focus and objective.

Cross-cutting measures are designed to address sustainability challenges that cut across multiple sectors and industries. These measures aim to ensure that sustainability considerations are integrated into investment decisions across different asset classes and investment categories. For example, cross-cutting measures may involve integrating environmental, social, and governance (ESG) factors into investment decision-making, regardless of the specific investment category.

Category-specific measures, on the other hand, are designed to address sustainability challenges and opportunities that are specific to a particular asset class or investment category. These measures recognise that different asset classes and investment categories have unique sustainability risks and opportunities that need to be considered when making investment decisions. For example, category-specific measures may involve considering the carbon footprint of a real estate investment or the social impact of a private equity investment.

The key difference between FCA SDR cross-cutting and category-specific measures is their scope and focus. Cross-cutting measures focus on integrating sustainability considerations into investment decision-making across different sectors and asset classes, while category-specific measures focus on addressing sustainability challenges and opportunities that are specific to a particular asset class or investment category.

Both cross-cutting and category-specific measures are important for promoting sustainable finance and investment practices that align with the SDGs and contribute to long-term value creation. The FCA's approach recognises the importance of both approaches and seeks to integrate them into its regulatory framework to promote sustainable finance and investment practices in the UK.