ESG – outcome of the FCA’s review of UK climate disclosures

On 6 August 2025, the FCA published its findings and next steps following its review into climate reporting by asset managers, life insurers and regulated pension providers.

What’s the background to the review?

The FCA’s climate disclosure rules, set out in its ESG Sourcebook (ESG 2) require firms to disclose climate-related information in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). (These recommendations were subsequently incorporated into the International Sustainability Standards Board (ISSB) Standards, following which, the TCFD disbanded).

The FCA has now reviewed how its rules have been working and what firms felt about the regime.

What did the FCA find?

The FCA concluded that, overall, its rules have increased firms’ consideration of climate risks and supported their integration into firms’ decision-making.

It found that firms:

• were now more transparent with their clients and consumers
• had encountered some challenges with the availability of data and consistent, well-developed methodologies.
• considered some information too complex for retail investors to engage with and thought the regime could be less granular and more proportionate.
• saw opportunities to simplify reporting, particularly given their broader sustainability disclosure obligations.

More specific findings included:

• firms felt that the rules had helped them consider climate change as a material risk, and to integrate climate risks and opportunities into their strategies
• some firms consider the disclosures to be too complex for retail investors and the response they receive from retail investors on their TCFD reports is limited, particularly at product level. This may be a result of the FCA’s findings that product reports were often difficult to find on the firm’s website
• although firms were generally able to report on backward-looking data, some found it more challenging to provide quantitative data to support forward-looking disclosures, such as scenario analysis – only around 50% of the product reports which the FCA reviewed disclosed the impact of all three climate scenarios on the fund, as the rules require. The FCA notes that this limits comparability between reports
• firms (particularly asset managers) noted that they must report under multiple sustainability disclosure regimes and considered the TCFD rules too granular. Their suggestion was to simplify and streamline sustainability disclosures
• firms also asked the FCA to clarify the future of its TCFD rules and encouraged it to consider international consistency while working with industry to develop any future regime.

What happens next?

As a result of the review, the FCA updated its sustainability reporting requirements webpage, clarifying how firms which are in scope of both its TCFD and Sustainability Disclosure Requirements (SDR) rules can report efficiently under both regimes.

The FCA is also considering how to streamline and enhance our sustainability reporting framework with a view to:

• simplifying disclosure requirements and easing unnecessary burdens on firms.
• maintaining good outcomes for clients and consumers to improve trust and reduce greenwashing.
• promoting international alignment and
• helping maintain the UK’s position as a global leader in sustainable finance.

Taking this work forwards, the FCA will consider sustainability reporting as a whole – including

• its SDR rules
• the ongoing endorsement of the ISSB standards (known as the UK Sustainability Reporting Standards), and
• developments on transition plans.

The FCA plans to engage further with industry to guide its next steps.