The UK’s Financial Conduct Authority (FCA) is set to revise sustainability reporting guidelines for asset managers, life insurers, and regulated pension providers.  

The regulator has shared insights from a recent evaluation of climate reporting practices and is looking to streamline the process in line with industry feedback. 

In 2021, the FCA established climate disclosure rules aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.  

With the TCFD’s mandate now complete and its guidelines integrated into the International Sustainability Standards Board (ISSB) Standards, the FCA has assessed how these rules are functioning. 

The assessment involved examining a selection of TCFD reports and engaging with various stakeholders, including trade associations and firms governed by the TCFD regulations.  

Findings indicate that the rules have prompted firms to factor climate risks into their strategic considerations and enhance transparency with clients regarding asset management and risk. 

However, firms have encountered obstacles, such as data availability and the complexity of methodologies.  

The current granularity of the reporting regime has been cited as excessive, particularly in light of the wider sustainability disclosure responsibilities firms face. 

In response to these challenges, the FCA has updated its sustainability reporting requirements webpage, offering guidance on efficient reporting under both TCFD and SDR rules.  

The regulator’s intent is to refine disclosure requirements, reducing the strain on firms while ensuring the quality and utility of the information provided to clients and consumers. 

The FCA’s review of sustainability reporting is part of an overarching strategy to refine the regulatory framework for asset managers.  

The regulator plans to consider the entirety of sustainability reporting, including SDR, the UK endorsement of ISSB standards, and developments concerning transition plans.