The Financial Conduct Authority

The UK’s financial regulator has published its long-awaited proposals to tackle inadequate climate change disclosures by firms.

The Financial Conduct Authority’s (FCA) proposals follow feedback from stakeholders to its October 2018 discussion paper on climate change and green finance.

Its proposals include consulting on new rules to improve climate-related disclosures by certain firms and clarifying existing obligations.

The regulator is proposing that any new disclosure rules should align with the Task Force on Climate-related Financial Disclosures (TFCD) framework where disclosures are made on a ‘comply or explain’ basis.

The FCA will publish a consultation paper about these proposals in early 2020.

The industry watchdog will also finalise rule changes requiring Independent Governance Committees (IGCs) to oversee and report on firms’ ESG and stewardship policies, as well as separate rule changes to facilitate investment in patient capital opportunities.

The regulator is due to publish a Feedback Statement in the coming weeks to address the most significant barriers to effective stewardship.

In addition, the FCA proposes to increase its expectations around green financial products and services. These include challenging firms where it sees potential greenwashing.

“We have an important role to play in creating an environment where firms can manage the risks from moving to a greener economy and capture the opportunities to benefit consumers,” Andrew Bailey, chief executive of the FCA, said.

“This Feedback Statement is the next step in our drive to provide clarity for firms and consumers about how our work will help support the response to the climate challenge and the development of the green finance market,” Bailey stated.

The proposals follow the FCA’s Joint Declaration on climate change made in July this year.

The declaration, made together with the Prudential Regulation Authority (PRA), Financial Reporting Council (FRC) and The Pensions Regulator (TPR), welcomed the government’s Green Finance Strategy and set out the FCA’s commitment to working collaboratively to address the risks of climate change.

Last Updated: 18 October 2019
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