The Financial Conduct Authority (FCA) has said it wants to see improvements in the climate change disclosures made by companies, as well as clearer information for consumers on green financial products and services
The regulator has published a feedback statement which identifies a number of priorities for its future work on climate change and green finance. These include issuers’ climate change disclosures, regulated firms’ integration of climate change risk and opportunities into their decision-making, and consumers’ access to green financial products and services.
Andrew Bailey, FCA chief executive, said: ‘We have an important role to play in creating an environment where firms can manage the risks from moving to a greener economy and capture the opportunities to benefit consumers.
‘This feedback statement is the next step in our drive to provide clarity for firms and consumers about how our work will help support the response to the climate challenge and the development of the green finance market.'
According to the feedback statement, in early 2020 the FCA will publish a consultation paper proposing new disclosure rules for certain issuers aligned with the Financial Stability Board’s taskforce on climate-related financial disclosures (TCFD) recommendations on a 'comply or explain' basis, and clarifying existing disclosure obligations relating to climate change risks.
The regulator will also finalise rule changes requiring independent governance committees (IGCs) to oversee and report on firms’ environmental, social and governance (ESG) and stewardship policies, as well as separate rule changes to facilitate investment in patient capital opportunities. This will be done by the end of the year.
It will be publishing a feedback statement in the coming weeks in response to a joint discussion paper with the Financial Reporting Council (FRC) on stewardship setting out actions to address the most significant barriers to effective stewardship.
Finally, the FCA proposes to clarify its expectations around consumers’ access to green financial products and services, and will be taking appropriate action to prevent consumers being misled by what it terms ‘greenwashing’.
By Pat Sweet