FCA published proposals (CP20/3, including a Technical Note) outlining the climate-related disclosure requirements for listed issuers and issuers with securities admitted to trading on regulated markets. FCA believes that the proposals will also be of interest to sponsors of listed companies, corporate finance and other advisers, accountants and auditors, consumer groups and individual consumers, industry groups, trade bodies and civil society groups, regulated firms, investors, policy makers and regulatory bodies, industry experts and commentators, and academics and think tanks. The consultation closes on June 05, 2020. FCA aims to publish a Policy Statement, along with the finalized rules and Technical Note, later in 2020.
FCA is proposing to introduce a new rule for commercial companies with a UK premium listing, requiring them to state whether they comply with the recommendations of the FSB Taskforce on Climate-related Financial Disclosures (TCFD) and to explain any non-compliance. FCA will consider consulting on extending this rule to a wider scope of issuers. FCA is also consulting on the guidance, in the form of a Technical Note, on existing obligations set out in EU legislation and in its Handbook that may already require issuers to disclose information on climate-related and wider environmental, social, and governance (ESG) matters under certain circumstances.
The proposed Technical Note, which is presented in Appendix 2 to CP20/3, lists provisions in various regulations and indicates how these may be relevant to ESG matters. In each case, referencing the language in the provisions, FCA indicates where ESG matters may need to be taken into consideration. This Technical Note is the result of a 2018 consultation, during which stakeholders acknowledged that existing disclosure requirements require the disclosure of financially material climate-related risks. However, respondents cited a number of practical, methodological, and data-related difficulties in determining materiality.
The work of the Climate Financial Risk Forum—an industry group that FCA and BoE's PRA launched jointly in March 2019—will also help to build disclosure capabilities. The Forum will soon be publishing industry guidance, covering climate-related disclosures, risk management, scenario analysis, and innovation. These guidance materials are grounded in the TCFD recommendations and will complement the proposed new rule. FCA is also considering how best to enhance climate-related disclosures by regulated firms, including asset managers and life insurers, to ensure a coordinated approach. FCA is working closely with the government and other regulators, including through a Taskforce established by the Treasury under the Green Finance strategy of government.
Keywords: Europe, UK, Banking, Insurance, Securities, CP20/3, Disclosure, Climate Change Risk, ESG, Sustainable Finance, TCFD Recommendations, FCA
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