The Discussion Paper sets out how the different impacts of climate change could impact the FCA’s long and short-term objectives, the opportunities and risks the transition to a low carbon economy presents in the UK’s financial services markets and the actions planned by the FCA in the near term.

We support the actions proposed by the FCA to encourage enhanced disclosure relating to this business-critical issue. In particular, we note that the FCA intends to consult on guidance to issuers about how the current regulatory regime might be interpreted to apply to climate change-related risks. Given the demand for such guidance and the need for it to be available as part of the 2019 year end reporting cycle, we encourage the FCA to consult on this and any other planned guidance as soon as practicable.

In developing a framework for reporting, we believe the Recommendations of the TCFD represent a good starting point. The framework is market-driven and investor-focused and has been designed to require disclosure of material information on climate-related financial risks and their effects in mainstream financial filings. It is recognised as an appropriate disclosure framework by IOSCO globally and by the European Securities and Markets Authority (ESMA) in the EU.

We also recommend that the FCA develop further guidance and educational resources regarding a clear, standardised definition of ‘green finance’ and consider how best to give customers and investors confidence that such products are genuinely ‘green’.

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