Regulators in the U.K. are proposing a rule that would push issuers to comply with global climate disclosure standards set by the Taskforce on Climate-related Financial Disclosures (TCFD).
The U.K.’s Financial Conduct Authority (FCA) published proposals that would impose new climate-related disclosure requirements on issuers, obliging them to comply with the TCFD standards, or explain why they can’t comply with those standards.
“The FCA recognizes that standards for disclosure and companies understanding of the financial impacts of climate change are evolving. For this reason, where companies are not yet able to make full disclosures, they should provide an explanation of the reasons why,” the FCA said.
The regulator also said that an industry group launched last year by the FCA and the Prudential Regulation Authority (PRA), the Climate Financial Risk Forum, will soon be publishing industry guidance on climate-related disclosures, risk management, scenario analysis and innovation.
The FCA said that it’s also currently considering how to enhance climate-related disclosures by regulated firms, such as asset managers and life insurers.
“Climate change presents a serious and wide-ranging threat to global economic prospects, society more broadly and our natural environment,” said Andrew Bailey, CEO of the FCA.
“The changes we propose will help to provide the transparency the market needs to be able to assess how well companies are adjusting to the risks of climate change,” he added.
“Improved disclosures will support better asset pricing and enable investors to make more informed choices about where to allocate their capital – which will ultimately support the transition to a low carbon economy.”
The deadline for comments on the rule proposal is June 5.