FCA Consultation Paper: Environmental disclosures and scrutiny of ‘Greenwashing’

FCA Consultation Paper: Environmental disclosures and scrutiny of ‘Greenwashing’

Blog WilmerHale W.I.R.E. UK

On 22 June the FCA published two Consultation Papers setting out its proposals for climate- related disclosure obligations on the regulated sector. The first paper proposed extending the application of an existing Listing Rule to all issuers of standard listed equity shares. Currently the Rule only applies to Premium Listed companies. The ‘comply or explain’ rule requires issuers to include a statement in their annual financial report setting out whether they have made TCFD1-consistent disclosures. Where they have not, and / or where such disclosures are in a document other than their annual report, the company is required to explain why and describe any steps taken (or planned) to make such disclosures in the future, along with an anticipated timeframe.

The second Consultation Paper proposed a set of TCFD-consistent disclosure requirements on asset managers, life insurers, and FCA-regulated pension providers. The required disclosures will need to be made both:

  • At the entity level- a requirement to publish, annually, a report on how the firm takes climate-related risks and opportunities into account in managing or administering investments on behalf of clients and consumers; and
  • At the product / portfolio level- a requirement to produce, annually, a baseline set of consistent, comparable disclosures in respect of their products and portfolios, including a core set of metrics.

These rules are expected to be effective, in respect of asset managers with more than 50 billion AUM and asset owners with 25 billion + AUM, by 1 January 2022, first disclosures to be made by 30 June 2023. The remaining firms have an additional year for implementation.



These proposals aim to increase transparency and ensure that investors and the market at large are better equipped to make decisions about the climate-related risks and opportunities of in-scope firms. They reflect an important plank in the UK Government’s ambition to transition to a net zero carbon economy: to shift consumer behaviour towards investing in green businesses. Relatedly, on 9 June the UK’s Treasury Department announced the appointment of a Green Technical Advisory Group (GTAG), set up to advise and assist the UK Government in its development and implementation of a Green Taxonomy. The Taxonomy will provide a common and defined set of standards and terms by which the environmental credentials of financial products can be evaluated and compared, in an effort tackle Greenwashing. Alongside the proposals in the Consultation Papers, the regulatory expectation and scrutiny over climate disclosures is taking shape. All businesses who are preparing such disclosures, or relying upon them when interfacing with customers, should take careful note.

1 TCFD- Task Force on Climate-related Financial Disclosures.

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