FCA plans to extend TCFD disclosures and target greenwashing

UK regulator's Business Plan 2021/22 sets out ESG and D&I aims

UK regulator the Financial Conduct Authority (FCA) has said it is consulting on new Task Force on Climate-Related Financial Disclosures (TCFD)-aligned disclosures and will continue to prioritise greenwashing concerns.

In its Business Plan 2021/22, the FCA said after introducing a new listing rule linked to TCFD recommendations in January 2021, it is now looking to extend this to more listed issuers, and will be looking to bring these new rules in from 1 January 2022.

“There are some positive noises coming out of the consultation, such as the ambition to create some degree of consistency with the EU Sustainable Finance Disclosure Regulation (SFDR) and the Department for Work and Pensions (DWP) obligations for occupational pension schemes from October this year, as well as the TCFD,” Mikkel Bates, regulations manager, FE fundinfo, told ESG Clarity last week.  

See also: – FCA’s consultation on TCFD reporting: Long-awaited details revealed

The FCA’s Business Plan also said addressing “concerns about greenwashing will remain a priority” and that it will continue to work with the government and international partners on standardising ESG disclosures.

The regulator supports the creation of the Sustainability Standards Board and is working with the IFRS Foundation to develop a baseline global reporting standard. Collaboration also extends to support for the government’s 2019 Green Finance Strategy and plans announced by the Treasury in July 2021 to implement economy-wide Sustainability Disclosure Requirements for businesses and investment products, and a new sustainable investment label.

It also said it will monitor investor stewardship activities, including AGM voting, and consider regulatory action if active stewardship on ESG issues is deemed insufficient.

Steve Kenny, chief distribution officer at Square Mile Investment Consulting and Research, said: “It should be applauded the FCA has set out some key objectives on ESG and its adoption by the financial services industry.  I applaud the six outcomes they wish to achieve, although the devil will be in the detail, as they say.”   

Diversity and inclusion

The FCA’s Business Plan 2021/22 also sets out its plans to improve diversity and inclusion internally and in the industry.

“We know we have work to do and have set ambitious targets: for example, women accounting for 45% of our senior leadership by 2020 and 50% by 2025. We missed our 2020 target by 5 percentage points but have regained ground following recent senior appointments,” it said.

In March FCA CEO Nikhil Rathi said the regulator would be exploring whether to require listed companies to have at least two diverse directors. The recent Business Plan said: “We are considering our approach to diversity in listed firms and will communicate more in the coming weeks.”

Its Regulatory Diversity and Inclusion Discussion Paper sets out plans to issue a survey, opening discussion on possible policy changes to help drive progress.

See also: – UK regulators take action to boost diversity in financial sector

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...