On 6 August 2025, the Financial Conduct Authority (FCA) published its findings following a multi-firm review of firms’ climate reporting in line with its rules.
Background
In 2021, the FCA finalised its new environmental, social and governance (ESG) sourcebook, requiring asset managers, life insurers and FCA-regulated pension providers to disclose climate-related information in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. In 2023, the TCFD disbanded after fulfilling its mandate and the International Sustainability Standards Board (ISSB) assumed responsibility for monitoring climate-related disclosures. The TCFD’s recommendations were incorporated into the ISSB’s IFRS S1 and IFRS S2 standards.
The FCA have reviewed its rules and how they have been working with firms, reviewing a sample of 10 TCFD entity reports and 77 TCFD product reports whilst engaging with trade associations and 7 firms in-scope of the TCFD rules.
Findings
Overall, the FCA found that rules have helped firms consider climate change as a material risk, build their capabilities and integrate climate risks and opportunities into their strategies. The rules have also helped firms be more transparent with their clients and consumers about how they take into account climate risks when managing or administering assets on their behalf.
However, the FCA highlights certain challenges that firms encountered such as the availability of data specifically quantitative data to support forward looking disclosures such as scenario analysis and firms providing consistent well-developed methodologies. Firms also felt that while detailed disclosure information is helpful for institutional investors, it may be too complex for retail investors, particularly at the product level from a reporting and accessibility perspective. Firms, specifically asset managers noted that they are required to report under multiple sustainability disclosure regimes and consider the TCFD rules to be too granular. Upon review, firms have asked the regulator to clarify the future of its TCFD rules and develop a proportionate and practical regime that is consistent with international standards whereby sustainability disclosures should be simplified and streamlined.
Next steps
The FCA have updated its webpage to clarify how firms in scope of both its TCFD and Sustainability Disclosure Requirements (SDR) rules can report efficiently under both regimes.
The FCA in light of its findings are considering how to streamline and enhance its sustainability reporting framework which include SDR, the ISSB standards and its developments on transition plans. The regulator states it will continue to work closely with the Government and regulatory counterparties to support consistent outcomes along the investment chain. It also plans to engage further with industry to guide its next steps.