FCA finalises climate disclosure rules for asset managers
The FCA has finalised its climate disclosure regime for asset managers and certain asset owners through Policy Statement PS21/24, completing the UK’s first TCFD-based framework for this sector in 2021. The rules make climate reporting mandatory for larger firms on a phased basis, with the first public reports due by June 30 and smaller qualifying firms following a year later.
Scope and core disclosure architecture
PS21/24 introduces new rules and guidance requiring asset managers, life insurers and FCA‑regulated pension providers to make climate-related disclosures aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. The regime is structured around two layers of reporting: an entity‑level TCFD report and a set of product- or portfolio‑level disclosures.
At entity level, in-scope firms must publish a TCFD report explaining how they take climate-related risks and opportunities into account in managing or administering investments. Disclosures under the new regime must be made on an annual basis, embedding climate reporting into firms’ regular reporting cycles.
Thresholds, exemptions and phased coverage
The rules apply only to firms above a materiality threshold, with a full exemption for asset managers whose assets related to their TCFD in-scope business average less than £5bn over three years. Firms with assets under management of less than £5bn are therefore not caught by the regime.
For asset managers, the regime initially captures those with more than £50bn in assets under management, before extending to smaller firms above the £5bn threshold. For FCA‑regulated asset owners, the initial scope includes firms with at least £25bn in assets under administration.
All remaining in-scope smaller firms with assets above £5bn are brought in through phased implementation, rather than a single start date. This structure differentiates between the largest managers and asset owners and the broader cohort of mid-sized firms that cross the £5bn line. Implementation timetable and reporting cycle
The FCA published PS21/24 on December 17, setting out the final rules and guidance and confirming the implementation timetable. The new climate-related disclosure rules apply from January 1 for the largest in-scope firms.
For asset managers, the regime came into effect on January 1 for those with more than £50bn in assets under management, and for asset owners with at least £25bn in assets under administration. Smaller qualifying firms above the £5bn exemption threshold enter the regime one year later, with rules applying from January 1 the following year.
The first public disclosures in line with the FCA’s requirements must be made by June 30, setting the initial reporting deadline for the largest asset managers and asset owners. Subsequent disclosures must be made by June 30 each year, establishing a fixed annual reporting cadence for both entity-level and product- or portfolio-level climate reports.
The next decision points will centre on how the FCA develops its ESG sourcebook and whether future iterations expand the scope or depth of climate metrics beyond the current TCFD-based baseline.
--- Sources: https://www.bankofengland.co.uk/prudential-regulation/publication/2019/enhancing-banks-and-insurers-approaches-to-managing-the-financial-risks-from-climate-change-ss https://www.debevoise.com/-/media/files/insights/publications/2022/01/20220114-fcas-final-rules-on-climate-related.pdf?rev=366df270216d47a58cc238dc885c7c44&hash=CE688F2D2FAB523A6B0F714F9991E695 https://www.fca.org.uk/publications/policy-statements/ps-21-24-climate-related-disclosures-asset-managers-life-insurers-regulated-pensions