Earlier this summer, the UK’s Financial Conduct Authority (FCA) published a review of climate reporting by asset managers, life insurers, and FCA-regulated pension providers. This review found that while mandatory climate disclosures improved risk management practices, the process and outcomes still leave much to be desired. To remedy this, the FCA is working to streamline climate reporting, including developing national ISSB-aligned standards. The review discusses next steps for climate reporting in the UK, stating:
“As we take it forwards, we will consider sustainability reporting as a whole. This includes SDR, the ongoing endorsement of the ISSB standards (known as UK Sustainability Reporting Standards), and developments on transition plans. We will continue to work closely with the Government and regulatory counterparts to support consistent outcomes along the investment chain.”
Climate reporting in the UK has been done through a TCFD-aligned framework since 2021. However, the FCA found TCFD disclosures lacking. The FCA notes that TCFD disclosures are too granular, requiring firms to disclose complex information that cannot be easily parsed by retail investors. The ISSB standards frame climate disclosures in financial materiality, making it easier to understand how climate management impacts a firm’s finances. While no concrete timeline has been provided, the FCA’s review indicates that the UK is still committed to developing and adopting ISSB-aligned standards.
Our members can learn more about climate disclosures here.
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