The Financial Conduct Authority (FCA) has today opened a consultation on plans to extend requirements for climate related-disclosures to certain listed companies and regulated firms.
Last December, the FCA introduced a requirement for commercial companies with a UK premium listing to adopt recommendations from the Task Force for Climate-related Financial Disclosures (TCFD), on a comply or explain basis.
However, the regulator has today unveiled plans to extend the application of its TCFD-aligned listing rule to issuers of standard listed equity shares.
It also plans to introduce TCFD-aligned disclosure requirements for asset managers, life insurers, and FCA-regulated pension providers, with a focus on the information needs of clients and consumers.
Sheldon Mills, executive director of consumer and competition at the FCA, said that the existing disclosure rules do not go far enough when helping the financial sector tackle climate change.
“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.”
The new plans 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.
They 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.
The FCA is also seeking views on other topical environmental, social and governance (ESG) issues in capital markets, including on green and sustainable debt markets, and the increasingly prominent role of ESG data and rating providers.
Mills added: “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."
The FCA is accepting feedback by 10 September 2021, and intends to confirm its final policy on climate-related disclosures before the end of the year.
Image credit: iStock
Author: Chris Seekings