The UK’s financial regulator has published its long-awaited proposals to tackle inadequate climate change disclosures by firms.

The Financial Conduct Authority’s (FCA) proposals follow
feedback from stakeholders to its October 2018 discussion paper on climate
change and green finance.

Its proposals include consulting on new rules to improve
climate-related disclosures by certain firms and clarifying existing
obligations.

The regulator is proposing that any new disclosure rules
should align with the Task Force on Climate-related Financial Disclosures
(TFCD) framework where disclosures are made on a ‘comply or explain’ basis.

The FCA will publish a consultation paper about these proposals in early 2020.

The industry watchdog will also finalise rule changes
requiring Independent Governance Committees (IGCs) to oversee and report on
firms’ ESG and stewardship policies, as well as separate rule changes to
facilitate investment in patient capital opportunities.

The regulator is due to publish a Feedback Statement in the
coming weeks to address the most significant barriers to effective stewardship.

In addition, the FCA proposes to increase its expectations
around green financial products and services. These include challenging firms
where it sees potential greenwashing.

“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,” Andrew Bailey, chief executive
of the FCA, said.

“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,” Bailey stated.

The proposals follow the FCA’s Joint Declaration on climate
change made in July this year.

The declaration, made together with the Prudential
Regulation Authority (PRA), Financial Reporting Council (FRC) and The Pensions
Regulator (TPR), welcomed the government’s Green Finance Strategy and set out
the FCA’s commitment to working collaboratively to address the risks of climate
change.