FCA consults on TCFD proposals for listed companies and asset managers

The Financial Conduct Authority (FCA) has launched a consultation on proposals to introduce the Task Force on Climate-related Financial Disclosures’ (TCFD) requirements for listed companies, asset managers, life insurers, and FCA-regulated pension providers.

The TCFD provides a framework for companies to calculate and disclose how climate-related risks and opportunities could impact their businesses.

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The FCA action comes after the Department of Work and Pensions brought forward draft regulations which will see the largest occupational pension schemes and master trusts report in line with the TCFD’s recommendations from October 2021.

The proposed rules aim to ensure that the right information on climate-related risks is available along the investment chain – from companies to financial services firms, to clients and consumers.

Firms would also be required to produce, on an annual basis, a baseline set of consistent and comparable disclosures in respect of their products and portfolios, including a core set of metrics.

The proposed scope would cover 98% or 12.1 trn of assets under management in both the UK asset management market and held by UK asset owners.

However, the proposals would not apply to firms with less than £5bn in assets relating to relevant activities.

The FCA also asked for input on its identifying potential sources of harm in the market for second-party opinions/verifiers, and for views on whether it, alongside the government, should “consider the development and creation of a UK bond standard, starting with green bonds?”.

The consultation which runs until September 10, is part of wider FCA consultation on ESG standards in capital markets, including green and sustainable debt markets and the role played by ESG data and ratings providers.

Sheldon Mills, executive director of consumer and competition at the FCA said, “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.” 

©Markets Media Europe 2021

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