FCA publishes new climate-related disclosure rules

The Financial Conduct Authority (FCA) has published new proposals on climate-related disclosure rules for listed companies and certain regulated firms, following its latest consultation. The proposals follow the introduction of climate-related disclosure rules for the most prominent listed commercial companies in December 2020 and are in line with the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD).

Among the FCA’s proposals are an extension to the application of its TCFD-aligned listing rules for premium-listed commercial companies to issuers of standard listed equity shares. Further, the regulator is proposing that TCFD-aligned disclosure requirements should be introduced for asset managers, life insurers, and FCA-regulated pension providers. Firms would be required to publish an annual report on how they take climate-related risks into account on behalf of clients and consumers. They would also be required to produce annual disclosures in respect of their products and portfolios, including a core set of metrics.

The regulator is inviting feedback to both consultations by 10 September 2021. Its final policy on climate-related disclosures will be confirmed before the end of the year.

The regulator aims to meet the chancellor’s expectation that the FCA should “have regard” to the government’s commitment to achieve a net-zero economy by 2050.

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.

“However, climate-related disclosures do not yet meet investors’ and market participants’ needs. The new rules will help markets, investors and ultimately consumers better understand the impact of climate change and make more informed decisions.”

Alongside these proposals, the FCA is also seeking views on other topical ESG issues in capital markets. That includes green and sustainable debt markets and the role of ESG data and rating providers.

The FCA will separately consider stakeholder views on the ESG-related discussion topics in capital markets. A feedback statement should be published in the first half of 2022.

Further information can be found here.

Published 24 June, 2021

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