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FCA consultations on expanding the application of climate-related disclosure rules

At the end of 2021, the Government released the ambitious TCFD Roadmap towards mandatory climate-related disclosures. Now the FCA has released two new consultation papers regarding climate-related disclosure rules and firms have until 10 September 2021 to absorb and respond to the proposals.

It is clear that the FCA is supporting the government’s net-zero policy objectives, and firms must act. Disclosures are here to stay, and ESG commitments are only going to increase.

For a further breakdown of CP21/18, CP21/17 and Novatus observations, please see below.


⚬ Proposals to extend the application of the FCA TCFD-aligned Listing Rule for premium-listed companies to issuers of standard listed equity shares.

⚬ The FCA is also seeking views on select topics, such as issues related to green, social or sustainable debt instruments, and ESG data and rating providers.

The correlation between different providers’ ESG ratings is low. However, improved availability of ESG information to reduce current data gaps will not necessarily result in increased convergence of ratings. Instead, continued differing scopes and methodologies to measure performance suggests that improved data may exacerbate the divergence of ratings.


⚬ TCFD-aligned disclosure requirements for asset managers, life insurers and FCA-regulated pension providers. The proposed scope will cover 98% of AUM in both the UK asset management market and held by UK asset owners, representing £12.1 trillion in assets managed in the UK and 34 asset owners and 140 asset managers.

Key Elements:

  • Entity-level disclosures.
  • Product or portfolio-level disclosures.

⚬ The FCA is proposing a proportional and phased approach, with the first phase effective from January 2022, and the second phase effective a year later.

⚬ Whilst the current proposals focus on climate-related disclosures, the FCA anticipates that rules and guidance will reside in a new ESG Sourcebook in the FCA Handbook, which will expand to include rules on wider ESG-related topics.

⚬ Where the TCFD-recommended disclosure requirements cover similar areas to EU rules, the FCA aims to ensure consistency both with the EU and internationally, as much as possible.

The FCA’s approach currently diverges from the EU approach to SFDR. Crucially, in contrast to EU focus ‘sustainability’ risks and adverse impacts, the UK appears to be more focussed on the ‘E’ of ESG, and climate-related areas specifically.