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FCA outlines new proposals on climate-related disclosure rules

Banks and asset managers emitted more carbon in 2019 than the whole of the UK

The FCA is seeking to implement financial disclosure rules for asset managers, pension providers and insurance companies, as it seeks to make forward progress in the area of carbon emissions.

On Tuesday the UK regulator revealed two of its consultations looking at introducing new rules, which are in-keeping with the recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD).

This applies to listed companies and FCA-regulated pension providers.

“The climate change challenge affects the whole of society. It is vital that the financial services sector plays a leading role in addressing this challenge,” FCA executive director of consumer and competition, Sheldon Mills, said.  

“Managing the risks of climate change and transitioning to a cleaner and less carbon-intensive economy will require high quality information on how climate-related risks and opportunities are being managed throughout the investment chain. 

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According to research by Greenpeace UK and WFF, the UK financial services industry is one of the largest contributors of carbon emissions in the country.

Banks and asset managers emitted more carbon in 2019 than the whole of the UK.

The proposed rules aim to ensure that the correct information on climate risks is available along the investment chain.

Rosanna Bryant, co-head of financial services, Addleshaw Goddard, commented: “Going green is fast becoming business critical, and when it comes to tackling climate change the whole is most certainly greater than the sum of its parts.

“Our latest research* shows that the majority of asset managers are already prioritising green investments. But this announcement from the FCA makes clear that firms will be held to account on how the investments they make today will impact all of our tomorrow. 

“While this proposal by the FCA is an vital step forward, it’s important that the regulator makes clear how this will interact or align with existing EU regulation for asset managers, such as the EU Sustainable Finance Disclosure Regulation.”

Research conducted by Addleshaw Goddard of 500 business leaders and 500 financial services leaders across the UK and Europe found that 92% of business leaders say that banks have been significant in influencing their business to act more sustainably.

While 84% of finance providers say they won’t offer services to companies that lack a clear net-zero strategy.

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