FCA confirms new rules on climate-related financial disclosures

The Financial Conduct Authority (FCA) has published two policy statements that confirm the final rules and guidance to promote better climate-related financial disclosures.

According to the FCA, better corporate disclosures will help inform market pricing and support companies, risk and capital allocation decisions, with improved disclosures to clients and consumers helping them make more informed financial decisions. The organisation added that these changes together will strengthen competition in the interests of consumers and drive investment towards green projects and activities.

Standard listed share issuers or equity shares represented by certificiates must now provide a statement in their annual financial reports underlining whether their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). If not – they must explain why.

Asset managers and asset owners regulated by the FCA will now have to disclose how they take climate-related risks and opportunities into account in managing investments and will have to make disclosures about the climate-related attributes of their products.

The FCA highlighted that it is the first securities regulatory to introduce mandatory TCFD-aligned disclosure requirements for asset managers and asset owners.

The rules will come into effect from 1 January 2022, with asset managers and asset owners having a phased implementation, with the rules initially applying to the biggest companies and coming into effect for smaller firms in 2023.

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