FCA proposals: climate-related disclosure rules - Thistle Initiatives

Written by Thistle Initiatives - Compliance consultancy | Jun 29, 2021 11:00:00 PM

What has happened?

The FCA has published in June 2021 new proposals on climate-related disclosure rules for listed companies and certain regulated firms. The proposals follow the introduction of climate-related disclosure rules for the most prominent listed commercial companies in December 2020, which are aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (the TCFD).

What do you need to do?

In the consultations the FCA is proposing:

to extend the application of its TCFD-aligned Listing Rule for premium-listed commercial companies to issuers of standard listed equity shares, and
to introduce TCFD-aligned disclosure requirements for asset managers (including UCITS and AIF managers), life insurers, and FCA-regulated pension providers, with a focus on the information needs of clients and consumers.

The key elements of the proposals are:

Entity-level disclosures. Firms would be required to publish, annually, an entity-level TCFD report on how they take climate-related risks and opportunities into account in managing or administering investments on behalf of clients and consumers.

Product or portfolio-level disclosures. Firms would be required to produce, annually, a baseline set of consistent, comparable disclosures in respect of their products and portfolios, including a core set of metrics.

The new proposals are among the FCA’s first substantive policy proposals for the UK asset management and asset owner sectors since the end of the EU withdrawal transition period. Given the global reach of regulated firms operating in the UK, the FCA has approached the design of the regime with international consistency in mind and to accommodate firms’ different business models.

The proposed rules are designed to help make sure that the right 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. This should help encourage investment in more sustainable projects and activities, consistent with the Chancellor’s expectations in the FCA’s recent remit letter that the FCA should ‘have regard’ to the Government’s commitment to achieving a net-zero economy by 2050.

The FCA is inviting feedback to both consultations by 10 September 2021 and it intends to confirm its final policy on climate-related disclosures before the end of 2021.

How can we help you?

If you’d like to know more about how we can help you with your climate-related disclosure arrangements, or any other regulatory compliance issues, our expert team is here to help.

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