Climate change and sustainable finance

Sustainability factors may pose material risks to regulated firms and markets. In particular, climate-related risks are systemic and will have impacts across the economy, including financial services and the consumers they support. Financial services and markets also have an important role to play in reducing carbon emissions and supporting the transition to a more sustainable future.

Our regulatory approach aims to ensure that market participants manage the risks of moving to a more sustainable economy, as well as the risks from a changing climate. 

We aim to ensure that consumers and market participants are provided with trustworthy sustainability-related information to help them make informed decisions. This helps improve competition by ensuring that firms do not gain an unfair advantage by making unsubstantiated sustainability claims.  

The Government aims to establish the UK as a global hub for sustainable finance activity and to implement a world-leading regulatory framework. 

We actively engage in international developments, including on international standards and frameworks. Through collaboration and influence, we champion the harmonisation of global standards to promote open, interoperable and resilient markets.

Anti-greenwashing rule

Our anti-greenwashing rule protects consumers from misleading sustainability claims and helps them to make informed choices. It also ensures fair competition among firms in a changing market. The rule requires that all sustainability-related claims be fair, clear, and not misleading.

This rule was introduced as part of the broader SDR and investment labels regime (PS23/16) and came into force on 31 May 2024. We also published guidance in FG24/2 to support its implementation.

Sustainability disclosure: asset managers and FCA-regulated asset owners

High quality, comparable information helps clients and consumers make better informed decisions about their investments. We've introduced measures, outlined below, to help increase transparency and trust in the sustainable investment market, both at an entity and product level.

Climate-related disclosure requirements

In January 2022, we introduced rules and guidance for certain asset managers and FCA-regulated asset owners to make mandatory disclosures consistent with the Taskforce on Climate-related Financial Disclosures (TCFD) on an annual basis at:  

• Entity level – setting out how climate-related risks and opportunities are taken into account in managing or administering investments on behalf of clients and consumers.
• Product or portfolio level – a baseline set of consistent, comparable disclosures, including a core set of metrics.

Following our multi-firm review, in June 2026 we consulted (PDF) on proposals to streamline the product level requirements and published the final rules in September 2026, in Handbook Notice 144 (PDF).  

These replace the public TCFD product reporting rules, with more targeted requirements:

• Firms must periodically consider whether climate-related risks are materially relevant to a product’s financial performance or return and, where they are, include information about those risks in existing communications to retail clients.
• Firms must provide, at minimum, Scope 1, 2 and 3 greenhouse gas emissions data to eligible institutional clients, if requested to help them meet their own climate-related reporting requirements. The obligation once per calendar year per products.  

The rules came into force on 25 September 2026. The rules for communicating with institutional clients will apply from 30 June 2027.

Sustainability Disclosure Requirements (SDR) and investment labels

We've introduced a package of measures that apply to asset managers to help consumers navigate the market for sustainable investment products, give them better information, minimise greenwashing and enhance trust. This includes:

• Four investment labels.
• Naming and marketing rules.
• Consumer-facing information.
• Detailed information in pre-contractual, ongoing product-level, and entity-level disclosures, and
• Requirements for distributors to ensure that information is made available to consumers.

These measures raise standards for industry, starting with UK funds.

Advisers' Sustainability Group report  

The Advisers' Sustainability Group (ASG) has published its industry-led report Sustainability in Practice: Guidance for Advisers and Trainers. This contains voluntary good practice recommendations and practical frameworks for advisers and trainers.

The ASG was convened by the FCA to support the development of sustainable finance capability across the financial advice sector.

The report reflects the views of the ASG and does not constitute FCA guidance or FCA expectations. Firms should continue to have regard to applicable FCA rules and guidance when determining how to meet their regulatory obligations.

Sustainability disclosure: listed companies

Financial markets rely on high-quality and comparable sustainability disclosures to inform asset pricing and capital allocation. We have disclosure rules for certain listed companies based on the TCFD recommendations, which aim to improve the quality and consistency of climate-related information in the market. This allows firms to better assess risks and opportunities within their own businesses and in those they invest in or finance.

In September 2026, we published PS26/19, which sets out our final rules to align listed companies’ reporting with the UK Sustainability Reporting Standards (UK SRS). The rules come into force from accounting periods beginning 1 January 2027. 

Alongside PS26/19, we are consulting on TN 803.1, which we welcome feedback on by 28 October 2026. Find out more information and how to respond. We have also published steps issuers can take to prepare for the new regime.

ESG ratings

ESG ratings generally assess how companies or other entities, assets, or financial products perform against environmental, social and governance criteria. They are used by asset managers, lenders, benchmark administrators and others, to inform capital allocation decisions and manage risk, among other uses.

In November 2026, we published PS26/22 with rules and perimeter guidance for the regulation of ESG rating providers operating in the UK market, following legislation from HM Treasury to bring ESG ratings within our regulatory perimeter. The rules are designed to improve the transparency, reliability and comparability of ESG ratings, helping to build confidence in the market.

Our Pre-Application Support Service will be available to help firms prepare for authorisation from February 2027. The authorisation gateway opens on 24 June 2027. We are staggering application periods and encourage firms to apply as early as possible within their window. From 29 June 2028, firms providing ESG ratings in the UK will need FCA authorisation and have the relevant permission before carrying on that activity, unless an exclusion applies.

Alongside regulatory intervention, we continue to support industry-led initiatives to raise standards in the market. In 2023, we initiated the launch of a voluntary, industry-led code of conduct for ESG ratings and data products providers, based on the International Organization of Securities Commissions’ (IOSCO) recommendations. We continue to encourage data providers that fall outside the scope of the ESG ratings regime to engage with and adopt the International Capital Market Association (ICMA) code.

Financing the transition to a more sustainable economy

There has been a significant global shift towards lower carbon economies. This provides opportunities and challenges for financial firms. There are also wider opportunities for the UK as a global centre for raising transition finance.  

We supported the Transition Finance Market Review in 2024 and sit on the Transition Finance Council’s Strategic Steering Group as an observer.

The FCA is focusing on ensuring market integrity in this area, particularly where firms make claims about green or transition products. More broadly, we are working with the market and other stakeholders to support UK firms to finance the transition through:

• The decarbonisation of existing assets.
• Scaling climate solutions that can help the wider economy decarbonise.

In 2026, we published findings from our Transition Finance Pilot which looked at practical barriers and solutions to financing climate solutions, highlighting the need for coordinated action across public and private sector stakeholders.

Supporting sustainable finance

Our work in sustainable finance goes beyond setting rules. We collaborate with industry and international partners to build capability, foster transparency, and support effective stewardship to support growth in UK financial services.