FCA Proposes Required TCFD-Aligned Climate Reporting for Asset Managers
The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK, released today proposed rules aimed at extending Taskforce on Climate-related Financial Disclosures (TCFD)-aligned climate disclosure rules to asset managers, life insurers, and FCA-regulated pension providers, as well as standard listed equity issuers.
According to the FCA, the new proposals are aimed at ensuring that high quality information on climate-related risks and opportunities is available along the investment chain, from companies in the real economy, to financial services firms, to clients and consumers.
Sheldon Mills, Executive Director of Consumer and Competition at the FCA said:
“The climate change challenge affects the whole of society. It is vital that the financial services sector plays a leading role in addressing this challenge. Managing the risks of climate change and transitioning to a cleaner and less carbon-intensive economy will require high quality information on how climate-related risks and opportunities are being managed throughout the investment chain.”
The TCFD was established by the Financial Stability Board in 2015, with the goal of developing consistent disclosure standards for companies, in order to enable investors and other stakeholders to assess the companies’ climate-related financial risk. The recommendations were published in June 2017.
The new proposals mark an expansion of rules released by the FCA in December 2020, requiring TCFD-aligned disclosures for UK premium listed commercial companies, which came into effect at the beginning of this year. The announcement also follow a letter sent earlier this year by UK Chancellor of the Exchequer Rishi Sunak, updating the remit of the FCA to incorporate the government’s commitment to achieve a net-zero economy by 2050 when considering how to advance its objectives and discharge its functions.
“The new rules will help markets, investors and ultimately consumers better understand the impact of climate change and make more informed decisions.”
The new consultations are open to feedback through September 10, 2021, and the FCA aims to confirm its final policy on climate-related disclosures before the end of the year. The FCA is also seeking views on other ESG issues in capital markets, including on green and sustainable debt markets, and the role of ESG data and rating providers.