FCA pioneers TCFD-aligned disclosure rules for asset managers

By James Langton | December 17, 2021 | Last updated on December 17, 2021
2 min read
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Asset managers and issuers alike will be expected to provide investors with enhanced climate risk disclosures in the year ahead, said the U.K.’s Financial Conduct Authority (FCA) today.

In a pair of policy statements, the FCA confirmed final rules and guidance that aim to improve climate-related financial disclosures.

Under the rules, which take effect on Jan. 1, 2022, issuers will be expected to report whether their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), on a comply or explain basis.

Additionally, asset managers and institutional investors — such as pension funds and insurance companies — will have to disclose how they incorporate climate-related risks and opportunities into their investment management processes.

And, they’ll have to make disclosures about the climate-related attributes of their products, the FCA statements said.

The new requirements will be phased in for asset managers, starting with large firms and applying to smaller firms in a year’s time.

The FCA said it’s the world’s first securities regulator to introduce mandatory TCFD-aligned disclosure requirements for asset managers and owners.

Earlier this year, the Canadian Securities Administrators (CSA) proposed adopting TCFD-based disclosure requirements for issuers, but has yet to make similar demands of investment firms.

In the meantime, various other regulators around the world are also seeking to enhance climate-related disclosure requirements.

For example, on Dec. 16, the U.S. Office of the Comptroller of the Currency (OCC) proposed draft principles for identifying and managing climate-related financial risks at OCC-regulated banks with at least US$100 billion in total assets.

The OCC said that it will use feedback to inform future guidance on climate-related financial risk disclosure requirements. The deadline for that consultation is Feb. 14, 2022.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.