FCA webpage on climate change and sustainable finance
On 23 April 2021, the FCA published a new webpage on climate change and sustainable finance. The FCA states that its sustainable finance strategy is based on 3 themes:
- Transparency – promoting good disclosures along the investment chain.
- Trust – ensuring that the market delivers sustainable finance instruments and products that genuinely meet investors’ sustainability preferences.
- Tools – Government, regulators and industry all working together to share experience, develop guidance and tools, and provide mutual support as the challenges of climate change are addressed.
The FCA notes that the Chancellor’s remit letter to it in March stated that it should consider the Government’s commitment to achieve a net-zero economy by 2050 when it works to advance its objectives and perform its functions as a regulator – the FCA will thus continue to broaden and deepen its sustainable finance strategy.
The FCA notes:
- Task Force on Climate-related Financial Disclosures (TCFD) was set up by the Financial Stability Board in 2015 to identify the market’s climate-related information needs and develop a set of climate-related disclosure recommendations. The FCA continues to work on the cross-Whitehall and regulator taskforce on setting out a strategy towards mandatory TCFD-aligned disclosures across the UK by 2025. This includes our work on TCFD-aligned disclosures by listed issuers and asset managers, life insurers and FCA-regulated pension funds.
- In 2019, the FCA established the Climate Financial Risk Forum (CFRF) with the Prudential Regulation Authority (PRA). The CFRF brings together senior financial sector representatives to share their experiences in managing climate-related risks and opportunities. It has also published a number of guides, developed by industry for industry use, covering topics such as disclosure, scenario analysis, risk management and innovation.
- The FCA will continue to work closely with the Financial Reporting Council FRC, other regulators and industry as firms continue to develop their stewardship strategies.
- The FCA is a member of the Sustainable Finance Taskforce (STF) under the International Organization of Securities Commissions and co-chairs the workstream on issuers’ sustainability disclosures – this workstream is collaborating closely with the International Financial Reporting Standards Foundation, which is working towards establishing a Sustainability Standards Board to develop a corporate reporting standard on sustainability. The STF work also aims to improve asset managers’ sustainability disclosures and investor protection, as well as considering the role of the ESG rating and data providers.