The Financial Conduct Authority (FCA), the UK’s conduct regulator for financial services firms and markets, has proposed scrapping mandatory TCFD-based product-level climate disclosures for investment firms, replacing them with a simplified framework that would save the industry an estimated £20m per year.
According to ESG Today, the regulator’s plan would remove existing product-level reporting requirements tied to the Taskforce on Climate-related Financial Disclosures recommendations and introduce two separate obligations in their place.
Retail investors would receive more accessible, periodic disclosures focusing on whether climate risks could materially affect the financial performance of a product, embedded within general risk and returns communications. Institutional clients, meanwhile, would be able to request scope 1, 2 and 3 greenhouse gas emissions data directly from firms on a limited basis of once per product per year, rather than receiving full published reports.
The proposals follow an internal review conducted by the FCA of the climate reporting rules it introduced in 2021, which required asset managers, life insurers and FCA-regulated pension providers to produce both entity-level and product-level climate disclosures each year. The product-level reports covered carbon metrics and climate scenario analysis in line with TCFD recommendations.
The review identified meaningful benefits from the 2021 rules, particularly around risk management. Firms reported that the requirements encouraged them to treat climate change as a material financial risk, develop internal capabilities and integrate climate considerations more thoroughly into their investment strategies. The transparency of disclosures to clients also improved as a result. However, the review concluded that retail investors found the level of detail in TCFD product reports too complex, resulting in low engagement. For institutional investors, the reports were largely bypassed in favour of direct bilateral engagement with firms to obtain the specific data they needed.
The FCA serves as the conduct regulator for financial services firms and financial markets across the UK, with responsibility for protecting consumers, maintaining market integrity and promoting competition.
The consultation on the new proposals is open until 13 July 2026.
FCA director of wholesale buy-side Michelle Beck said, “As part of being a smarter, more proportionate regulator, we’re cutting complexity in our rules for asset managers, while keeping the focus on clear, useful information for investors. These proposals will make it easier for firms to communicate with their customers in ways that genuinely inform and engage them.”
Copyright © 2026 FinTech Global
