In a speech last week the FCA’s Christopher Woolard outlined the FCA’s role in mitigating damage to asset management and financial services by climate change.

Mr Woolard, the regulator’s executive director of strategy and competition, was addressing the FCA’s Innovating for a Greener Great Britain event, in London, on Friday.

He began by outlining the merits of environmental action like recycling and using sustainable transport, before turning to the specifics of the FCA’s role.

He said: “The words ‘climate change’ and ‘green’ do not explicitly appear in any of the 321 pages of the legislation that created the FCA.”

“When we look to the future, we see a financial services market that could be transformed both by climate change itself and the transition to a low carbon economy.

“We’ve seen a huge growth in the demand for green financial services products.

“There are now over 70 green bonds listed on the London Stock Exchange, raising more than $22bn in seven currencies. Thirty-eight green companies have raised $10bn in London.

“And in the retail sector we’ve recently seen the introduction of the UK’s first green mortgage.

“Research and surveys looking at financial decision-making amongst millennials and Generation Z suggest that this demand will only increase.

“Beyond the growth spurt we’re seeing in green products, we also have to consider the impact of climate change on investments, and on all intermediaries in the investment chain.”

He added: “But what might good look like?

“Investors being able to invest with confidence in green finance.

“A clear understanding, or taxonomy, of what green means.

“No greenwashing or mis-labelling.

“A way of measuring the effectiveness of the ‘green’ aspect of the product, as well as the financial return.

“Investors pricing in climate change risk.

“And, more broadly, an awareness amongst practitioners of how their business decisions may obstruct the path towards low carbon investment.”

He said it was not a matter of “asking the industry to be altruistic, but about how long-term risk is priced.”

Mr Woolard said environmentally-friendly financial services presented “a major opportunity for UK asset managers to win international business based on the highest standards.”

Explaining the FCA’s role, in what he called the “green boom”, he said: “Whichever way we look at this, it’s clear that climate change will result in significant changes for the financial services sector.

“That’s where we at the FCA comes in.

“Our job is to make markets for financial services work well.

“Part of that is ensuring that financial services are adequately prepared to cope with the changes on the horizon.

“We’re doing this in a number of ways.

“Following the Law Commission’s recommendations, we have announced our intention to consult on rule changes requiring Independent Governance Committees (IGCs) to report on firms' policies towards evaluating environmental, social and governance (ESG) considerations, including climate change.

“And we’re keen to support financial services in playing a positive role in global climate change efforts.

“We are also looking at how we can ensure that asset managers are able to make informed decisions about the climate risks faced by the companies they invest in.

“This means they can inform investors in their funds of the environmental impact of their investments.”

The FCA recently launched a consultation on the subject, with responses requested by 19 January.

Mr Woolard also revealed the regulator will work with the PRA to establish a new Climate Risk Forum, alongside colleagues at the Bank of England, “to help consider climate-related financial risks, share best practice and provide intellectual leadership in this emerging field.”