The Financial Conduct Authority (FCA), the UK’s financial services conduct regulator, has put forward proposals to scrap TCFD-based product-level climate disclosures for investment firms, replacing them with a streamlined regime designed to cut compliance costs and deliver more useful information to investors.
According to ESG Today, the new framework, currently out for consultation until 13 July 2026, would deliver an estimated annual saving of around £20m for the investment industry.
Under the proposed changes, firms would no longer be required to publish comprehensive product-level climate reports aligned with Taskforce on Climate-related Financial Disclosures (TCFD) standards. Instead, retail investors would receive periodic, accessible disclosures covering material climate risks relevant to the financial performance of a product, communicated within general risk and return information.
For institutional clients, firms would be required to supply scope 1, 2 and 3 greenhouse gas (GHG) emissions data on request, capped at once per product per year, enabling those clients to meet their own disclosure obligations without firms bearing the cost of full public reporting.
The proposals stem from a post-implementation review the FCA conducted in 2025 of its 2021 climate reporting regime. That framework had required asset managers, life insurers and FCA-regulated pension providers to publish annual entity-level reports on how climate risks and opportunities inform their investment and administration activities, as well as product-level reports containing carbon metrics and climate scenario analysis.
The review identified meaningful benefits from the original rules. Firms said the requirements had prompted them to treat climate change as a material financial risk, strengthened their internal capabilities, and improved transparency with clients on how climate considerations are factored into asset management. However, the review also found that retail investors, while still concerned about climate risk, found the level of detail required under TCFD recommendations too complex, resulting in low engagement with product-level reports. Institutional investors, meanwhile, were found to typically deal with firms directly to obtain the specific data they need, rather than drawing on the publicly published documents.
The FCA said the revised rules form part of its broader push to streamline sustainability reporting obligations for asset managers and asset owners, delivering a regime that is more proportionate and outcomes-focused.
FCA director of wholesale buy-side Michelle Beck said, “As part of being a smarter, more proportionate regulator, we’re cutting complexity in our rules for asset managers, while keeping the focus on clear, useful information for investors. These proposals will make it easier for firms to communicate with their customers in ways that genuinely inform and engage them.”
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