The FCA wants better disclosure to clients on climate change issues and ‘green’ financial products.

Regulated firms should also begin to take into account climate change issues in ‘decision-making.’

The watchdog published today a feedback statement setting out its proposals to “improve climate change disclosures by issuers and information to consumers on green financial products and services.”

Priorities that will set the regulator’s climate change agenda include: climate change disclosure, regulated firms’ integration of climate change risk and opportunities in their decision-making and consumers’ access to green financial products and services.

Andrew Bailey, chief executive of the FCA said: “We have an important role to play in creating an environment where firms can manage the risks from moving to a greener economy and capture the opportunities to benefit consumers.

“This Feedback Statement is the next step in our drive to provide clarity for firms and consumers about how our work will help support the response to the climate challenge and the development of the green finance market.”

The FCA plans to:

• Consult on new rules to improve climate-related disclosures by certain firms and clarifying existing obligations
• Finalising rule changes requiring Independent Governance Committees (IGCs) to oversee and report on firms’ environmental, social and governance (ESG) and stewardship policies, as well as separate rule changes to facilitate investment in patient capital opportunities
• Publish a feedback statement in response to a joint Discussion paper with the Financial Reporting Council (FRC) on stewardship setting out actions to address the most significant barriers to effective stewardship
• Clarify its expectations on consumers’ access to green financial products and services and taking appropriate action to prevent consumers being misled

These papers contain more information about the FCA’s work in this area:

1. FS19/6: Climate change and green finance
2. DP18/8: Climate change and green finance