We are introducing a new Environmental, Social and Governance (ESG) sourcebook containing rules and guidance for asset managers and certain FCA-regulated asset owners to make disclosures consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
What we are changing
We are introducing new rules and guidance for asset managers and certain FCA-regulated asset owners to make mandatory disclosures consistent with the TCFD’s recommendations on an annual basis at:
- Entity level – an entity-level TCFD report setting out 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 – a baseline set of consistent, comparable disclosures in respect of their products and portfolios, including a core set of metrics.
Our rules aim to increase transparency on how firms are managing climate-related risks and opportunities and enable clients and consumers to make considered choices, while also remaining proportionate.
This should, in turn, help to enhance competition in the interests of consumers, protect consumers from unsuitable products, and drive investment towards greener projects and activities.
Who this applies to
This PS will directly affect:
- asset managers
- life insurers (including pure insurers)
- non-insurer FCA-regulated pension providers, including platform firms and Self-invested Personal Pension (SIPP) operators
- FCA-regulated pension providers
It will also be of interest to other stakeholders, including:
- trustees, operators and managers of occupational pension schemes
- industry associations, trade bodies, civil society groups, industry experts and academics
- accountants, auditors and investment consultants
- other regulators and policy makers
- consumer groups
Background to climate-related disclosures
Our final rules and guidance form part of a broader strategic aim to promote transparency on climate change and wider sustainability along the value chain.
Our work supports the UK’s commitment to mandatory TCFD-aligned disclosure obligations across the UK economy by 2025. In finalising our rules, we have also had regard to the Government’s net zero commitment, in line with the Government’s expectations.
We will build from this work as we contribute to the implementation of the Government’s Roadmap to Sustainable Investing. As part of this, we issued a discussion paper (DP21/4) on how Sustainability Disclosure Requirements and investment labels can best build on our TCFD-aligned disclosure rules and guidance.
Our new climate-related disclosure rules will apply from 1 January 2022 for the largest in-scope firms and 1 year later for smaller firms above the £5 billion exemption threshold. The first public disclosures in line with our requirements must be made by 30 June 2023.
Firms that are directly affected should familiarise themselves with the details of the rules and associated guidance, and consider what arrangements they need to ensure that they are able to meet the requirements.