Two Policy Statements confirming final rules and guidance to promote better climate-related financial disclosures have been sent out by the FCA.
Market pricing and support for business, risk and capital allocation decisions will be made thanks to better corporate disclosures. Moreover, improved disclosures to clients and consumers will assist them to make more informed financial decisions. This, in turn, will strengthen competition in the interests of consumers, protecting them from buying products deemed unsuitable and pushing investment towards more eco-friendly projects and activities.
Issuers of standard listed shares, or equity shares represented by certificates (global depositary receipts) are presently obliged include a statement in their annual financial reports setting out whether their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). If not, they are compelled to explain why.
FCA-regulated asset managers and asset owners — including life insurers and pension providers — will have to lay out how they consider climate-related risks and opportunities in managing investments. They’ll also have to make disclosures about the climate-related attributes of their products.
From 1 January 2022, these rules will come into effect. Asset managers and asset owners will have a phased implementation, with the rules initially applying to the biggest firms and coming into effect for smaller firms one year later.
A now-growing number of regulators globally who are adopting the TCFD’s recommendations in their disclosure rules are at the vanguard OF the FCA. We are the first securities regulator to introduce mandatory TCFD-aligned disclosure requirements for asset managers and asset owners.
By 2025, the measures are set to be implemented as part of the Government’s coordinated work to introduce TCFD-aligned disclosures across the economy as part of the UK’s wider net zero commitment. We will build on this work as we contribute to the implementation of the Government’s Roadmap to Sustainable Investing.
In our Consultation Paper on climate-related disclosures by certain standard listed companies, an additional discussion on ESG integration in capital markets was had. Feedback on this is set to be published in the first half of 2022.