FCA seeks comment on proposed climate-related disclosure requirements

The new rule would require all commercial companies with a premium listing to either make climate-related disclosures consistent with the approach set out by the Taskforce on Climate-related Financial Disclosures (TCFD) or explain why not. “Where companies are not yet able to make full disclosures, they should provide an explanation of the reasons why,” the FCA said.

Additionally, the FCA said it will consider consulting on extending this rule to a wider scope of issuers, including listed issuers; issuers with securities admitted to trading on regulated markets; and other entities in scope of requirements under the Market Abuse Regulation and the Prospectus Regulation.

The proposals set out in the consultation paper build upon the TCFD’s existing global standard. The FCA said it’s also seeking feedback on clarifications to how existing requirements applicable to all listed companies already require climate- and other sustainability-related disclosure. “The changes we propose will help to provide the transparency the market needs to be able to assess how well companies are adjusting to the risks of climate change,” said FCA Chief Executive Andrew Bailey.

The work of the Climate Financial Risk Forum, an industry group the FCA launched jointly with the Bank of England’s Prudential Regulation Authority in March 2019, will also help to build disclosure capabilities. The forum will soon publish industry guidance, covering climate-related disclosures, risk management, scenario analysis, and innovation. “These guidance materials are also grounded in the TCFD’s recommendations and will complement the proposed new rule,” the FCA said.

The FCA is also considering how best to enhance climate-related disclosures by regulated firms, including asset managers and life insurers, to ensure a coordinated approach. The FCA said it is working closely with government and other regulators, including through a task force established by the Treasury under the government’s Green Finance strategy.

The FCA said the consultation will be of interest to a variety of parties, including sponsors of listed companies; corporate finance and other advisers; accountants and auditors; consumer groups; industry groups, trade bodies, and civil society groups; and regulated firms.

The consultation period closes June 5.