The UK currently requires financial services firms to make TCFD-aligned disclosures for their investment products. However, this requirement could be changing. The FCA is eyeing revisions that would do away with TCFD reporting in favor of a new simplified reporting structure. ESG Today reports:
“The new proposal follows a review carried out by the FCA of the results of climate reporting rules put in place by the regulator in 2021, which required asset managers, life insurers and FCA-regulated pension providers to disclose climate-related information in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. Under the current rules, firms are required to annually publish entity-level reports, setting out how the firm takes climate risks and opportunities into account when managing or administering investments, and product-level reports including carbon metrics and climate scenario analysis.”
The article notes that many retail investors are overwhelmed by the information provided in TCFD reports, finding it too complex. The proposed simplified structure would see information presented differently to retail investors than to institutional investors. Institutional investors would be provided with GHG inventories for all scopes, where retail investors would only be provided with material climate-related risks.
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