We comment on the FCA’s consultation paper CP21/17

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11 Sep, 2021

We have published our comment letter on Financial Conduct Authority’s (FCA's) consultation paper CP21/17 'Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers' (“the CP”).

Climate change is a systemic and existential risk, which requires an immediate and urgent response.  We strongly support the UK government’s goal of achieving transparency in business reporting on climate-related issues across the UK economy.  We agree that there is an important opportunity for the UK to establish a pathway towards mandatory reporting around the world via the UK’s G7 Presidency and the 26th UN Climate Change Conference of the Parties (COP26).  We therefore welcome the CP and, consistent with our response to the FCA’s previous consultation paper CP20/3 and linked current consultation paper CP21/18, support the extension of the requirement to report consistently with the Recommendations and Recommended Disclosures of the Task Force on Climate-related Financial Disclosures (TCFD).  We see this as an opportunity for the FCA to take the lead on improving data flow and capital allocation in the investment chain, and to align with other reporting and disclosure requirements.  Done right, the regulatory package will improve the transparency of firms’ commitments at both a corporate and product level, as well as the veracity of any claims made.

Deloitte Touche Tohmatsu Limited’s (DTTL’s) Global CEO, Chairman and CFO are signatories to the statement of support for the TCFD and DTTL is actively involved in its work through Catherine Saire, a member of the TCFD.  TCFD is market-driven and investor-focused and is recognised as an appropriate framework by the International Organization of Securities Commissions (IOSCO) globally and by the European Securities and Markets Authority (ESMA) in the EU.  TCFD is not itself a reporting standard per se but is a positive step towards a comprehensive global system.  Progress, including on standards covering climate, is accelerating, as shown by the recent steps taken by IOSCO and the IFRS Foundation, and we fully support and encourage the development of global sustainability standards which will enhance global comparability and consistency.  We appreciate that the proposals in this consultation represent an interim measure until such a standard is published and encourage the FCA – and the UK government more widely - to adopt and align with any such standard as soon as practicable, and to do all that it can to encourage adoption by jurisdictions around the world, in order to promote consistent and comparable disclosures.

Furthermore, we strongly encourage the FCA to finalise and publish the outcome of this consultation as soon as practicable, ideally in advance of COP26, to give organisations clarity on the regulatory expectations ahead of the proposed implementation date of 1 January 2022.

Click to view the full comment letter.

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