Alongside the U.K.’s other major financial sector regulators, the Financial Conduct Authority (FCA) published a report today that sets out its efforts to address the risks posed by climate change.
Among a range of other actions, the FCA plans in December to publish final rules setting disclosure requirements for issuers, asset managers, insurers and pension managers that follow the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
In addition to its forthcoming disclosure rules, the FCA said that it also plans to consult on product labeling, firms’ plans for a transition to “net zero”, and to issue its own TCFD-compliant report in 2022.
“To successfully transition to a net-zero economy requires not only that firms adapt and innovate, but that we regulators do too. That is why we are leading the effort to ensure there are consistent, trusted standards for disclosure investors can rely on,” said Nikhil Rathi, CEO of the FCA, in a release.
At the same time, a report from the U.K.’s Prudential Regulation Authority (PRA) finds that firms have made “tangible progress” at adopting climate-related risk management practices (which were mandated in July 2020), but that “there is still much further to go.”
“As we move into 2022, the PRA will actively supervise to ensure firms meet expectations, with firms needing to demonstrate a good understanding and management of climate-related financial risks on an ongoing basis,” the PRA said.
The prudential regulator will also be considering whether to revise banks’ capital requirements to ensure that they are adequately reserved against material climate-related financial risks. “We will provide an update on our approach in 2022 following a call for further research and a conference on climate change and capital requirements,” the PRA said.
Earlier this month, the Canadian Securities Administrators (CSA) published its own proposals for mandating TCFD disclosures by issuers. Those proposals are out for public comment.