Written by Pooja Bokhiria

On 22 June 2021, the FCA published a consultation paper on enhancing climate-related disclosures by asset managers, life insurers, and FCA-regulated pension providers (‘CP21/17’).

The proposals set out in the paper align with the recommendations of the Task Force on Climate-related Financial Disclosures (‘TCFD’) and are intended to “increase transparency and enable clients and consumers to make considered choices.” They include:

  • Entity-level disclosures: firms will 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 will 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 proposed scope will cover 98% of assets under management in both the UK asset management market and held by UK asset owners. However, they will not apply to firms with less than £5 billion in assets relating to relevant activities.

In addition to the proposals, the FCA is introducing a new Environmental, Social and Governance (ESG) Sourcebook in the FCA Handbook which will set out its proposed rules and guidance.

Responses to the consultation paper are due by 10 September 2021 and the final policy is due to be confirmed before the end of 2021.

For further information, a copy of the FCA’s consultation paper can be found here.