ClientEarth briefing: FCA Consultations CP21/17 and CP21/18 on enhancing climate-related disclosures

The FCA is proposing to expand climate-related disclosure requirements to:

• select categories of asset managers, life insurers and FCA-regulated pension providers (consultation “CP21/17”); and
• issuers of standard listed equity shares, and to invite views on environmental, social, and governance (“ESG”) topics in capital markets (consultation “CP21/18”).

However, in our view, the disclosure requirements and scope of companies proposed are insufficient to ensure the granularity of detail investors and other stakeholders need and are entitled to expect to make informed decisions on capital investment and/or reallocation. We need decisive action from all stakeholders, without delay, to reduce emissions and bring finance flows in line with the transition to a sustainable economy. The FCA plays a key role in facilitating those decisions by regulating how firms disclose climate change-related information. Accordingly, we see mandatory, transparent, climate reporting as a necessary first step to (i) facilitating the timely reallocation of capital away from carbon-intensive business, and (ii) ensuring accountability in relation to harnessing (or failing to manage) climate risks, impacts and opportunities.

This briefing sets out our key recommendations for improving the FCA’s proposals. We welcome discussion on these matters and strongly encourage other stakeholders to consider and adapt and/or refer to the points we have raised when responding to the consultations (deadline for both consultations: 10 September 2020).