FCA to simplify climate reporting rules for investment products
The Financial Conduct Authority has proposed changes that could simplify climate reporting for investment products, with the regulator estimating that firms could save around £20 million a year if the reforms go ahead.
Under the consultation, detailed product-level disclosures would be replaced with simpler, more targeted information for retail investors, in line with the Consumer Duty. The FCA says the aim is to give investors clearer insight into financially material climate risks while reducing reporting complexity and unnecessary cost for firms.
The proposals follow an FCA review which found that while climate reporting rules have improved firms’ awareness of climate risk, product-level reports are often considered too complex by investors and are not widely used. The consultation is open until 13 July 2026, with final rules expected later this year.
Charles Herbert says the regulator’s latest proposals are a welcome sign that climate disclosure rules may be moving towards a more proportionate and practical footing for firms.
“The FCA’s proposals to simplify climate reporting for investment products are set out in a consultation that will close on 13th July 2026. The proposal, to replace detailed product-level reports based on the Task Force on Climate-related Financial Disclosures (TCFD) with simpler, more targeted information for retail investors, is to be welcomed.
The regulator will look to finalise and implement rule changes later in the year. The FCA’s acknowledgement that product-level reports are not widely used by investors is realistic and sensible and in line with other initiatives, such as those in the Enhancing Financial Services Bill, to reduce the regulatory burden on FCA regulated firms.
It is difficult to quantify the precise cost of such climate reporting for investment products per firm, but it is clear the overall figure of £20 million quoted by the FCA is not significant in itself in purely financial terms. However, it does appear to signal an acknowledgement by the regulator that, whilst safeguards should be in place for retail investors, the current burden and requirements on firms is disproportionate and some measured correction is appropriate.”
Charles was featured by IFA Magazine, Wealth DFM, Investment Week.
