FCA sets timeline for TCFD alignment

14 May, 2021

New rules forcing asset managers and other financial services providers to disclose climate change risks will come into force later this year, the UK regulator has said.

Under proposals set out in the Financial Conduct Authority's (FCA) Regulatory Initiatives Grid, firms will have to align themselves with the recommendations of the Task force on Climate-related Financial Disclosures (TCFD).

The move will bring asset managers, life insurers, and FCA-regulated pension providers in line with other sectors as part of the UK government’s commitment for all listed companies and large asset owners to disclose in line with TCFD recommendations by 2022.

The FCA is expected to publish a consultation on the proposals in June with the final rules due to be announced in the final quarter of this year.

The consultation will be accompanied by a second consultation looking at extending the scope of listed issuers covered by the regulator’s TCFD-aligned disclosure rules.

It comes after the Department for Business, Energy, and Industrial Strategy recently consulted on proposals to mandate similar TCFD disclosures by publicly quoted companies, large private companies and limited liability partnerships.

In 2017, the TCFD, which was launched by the Financial Stability Board, published climate-related financial disclosure recommendations to help companies provide better information to support informed capital allocation.

The recommendations are structured around four thematic areas of how organizations operate: governance, strategy, risk management, and metrics and targets.