FCA introduces new rule for climate disclosures

The UK Financial Conduct Authority has published a final rule and guidance promoting better climate-related financial disclosures for UK listed companies.

Following the announcement of the rules in November, the FCA say that companies will be required to include a statement in their annual financial report which sets out whether their disclosures are consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), and to explain if they have not done so.

The rule will apply for accounting periods beginning on or after 1 January 2021.

The FCA said it expected the new rules to address potential harms and “reduce the risk of consumers buying unsuitable or mis-sold products” by supporting “more reliable climate-related disclosures to clients and end investors”. In a policy statement the FCA added, “It should also help ensure that the cost of capital better reflects how well companies are managing climate-related risks and opportunities. Ultimately, we should expect financial flows better to support the transition to net zero carbon emissions, through which policymakers hope to address climate change.”