FCA proposes simplified climate reporting rules for investment products
On Friday, the Financial Conduct Authority proposed simplifying climate reporting for investment products, saying the change could save investment firms around £20m a year by replacing detailed product-level Task Force on Climate-related Financial Disclosures (TCFD) reports with simpler, targeted information for retail investors. The consultation appears in the FCA’s quarterly consultation paper, CP26/17, and frames the change as part of wider work to streamline sustainability reporting for asset managers and FCA‑regulated asset owners.
The FCA emphasises the proposals are intended to give retail investors clearer, more usable information about how material climate risks — for example floods, storms and other extreme weather events — could affect a product’s financial performance, while reducing unnecessary compliance costs. The proposals also sit alongside the regulator’s Sustainability Disclosure Requirements and its Consumer Duty objective of clearer communications for retail customers.
Key changes
- Cost saving: The simplified approach removes the requirement to produce full TCFD-style product reports while keeping targeted investor disclosures, with no loss of consumer-relevant information.
- Minimum product metric: For product-level disclosure, CP26/17 would mean firms would no longer have to produce the full TCFD product-report metric set; the minimum required disclosure would be Scope 1, Scope 2 and Scope 3 greenhouse‑gas emissions when requested by institutional clients.
- Institutional access: CP26/17 would permit institutional clients to request key emissions data from firms, but firms would not need to publish that data as part of full public product reports.
- Optional metrics and methodology: Firms may disclose other metrics — including scenario or alignment measures such as temperature rise — but if they do, they must clearly explain the methodology; CP26/17 does not mandate a single temperature‑alignment methodology as a minimum.
- Reporting coverage: The consultation includes a proposed climate‑reporting questionnaire intended to cover funds and mandates rather than a single product type, and the published summary does not list UCITS, AIFS or UK PRIIPS by name.
- Other product amendments: The proposal would permit certain authorised funds to hold cryptoasset exchange‑traded notes up to 10% of scheme property.
The bullets above describe the policy mechanics the FCA is consulting on; taken together, they move routine, public-facing product disclosure towards a retail‑focused summary while preserving deeper emissions and scenario data for institutional users on request. The FCA says this should maintain investor protection against greenwashing while reducing reporting complexity for firms.
Practical implications for asset managers
For asset managers and asset owners, the immediate operational change would be to concentrate resources on clearer retail‑facing narratives and to retain the capacity to respond to institutional data requests, rather than preparing and publishing the broader TCFD product metric set by default. The consultation text suggests firms may continue to publish wider metrics voluntarily, but must document methodologies where they do.
Legislative path
CP26/17 is the FCA’s Quarterly Consultation, published on 5 June 2026; it would require the simplified climate‑reporting measures described above. The consultation is open until 13 July, and the FCA says it aims to finalise and implement the rule change in the autumn. The consultation paper (CP26/17) explains how to respond.
--- Sources: https://www.fca.org.uk/news/press-releases/simpler-climate-reporting-rules-could-save-firms-20m-annually
