FCA consults on simplifying UK climate reporting rules

On 5 June 2026, the FCA set out proposals intended to simplify product-level climate disclosure requirements for investment products.

The proposals are contained in Chapter 2 of Quarterly Consultation No 52 - CP26/17 (the CP).

The consultation period closes on 13 July 2026. The FCA aims to finalise and implement the rule change later in 2026.

Background to the CP

In 2021, Policy Statement PS21/24 introduced climate disclosure rules for asset managers, life insurers and FCA-regulated pension providers, based on the recommendations of the Taskforce on Climate-related Financial Disclosures. See here for our summary of PS21/24.

In scope firms were required to publish annual reports at both entity and product level - the latter included a set of carbon metrics and climate scenario analysis.

The FCA carried out a review in 2025 of how the rules were working after three years of disclosures – following a summary of its findings, it carried out further engagement with stakeholders. See here for our note on the FCA’s summary.

The FCA has now unveiled its proposals, which are intended to provide

• more informed investment decision-making by retail and institutional investors
• a deeper consideration of climate risks and opportunities by in-scope firms and
• a coordinated flow of climate information along the investment chain

What has the FCA proposed?

The FCA is proposing to replace the current TCFD product reporting requirements with “fewer, more targeted, and more outcomes based rules”, intended to ensure that retail and institutional investors get the right information based on their specific needs but, at the same time, allowing firms greater flexibility as to how they communicate with such clients.

(a) Communicating with retail clients

In order for retail investors to be able to make more informed investment decisions through greater transparency on financially material climate risks and opportunities, a new rule (ESG 2.3.1BR) would require firms to:

• consider periodically whether climate risks and/or opportunities could be materially relevant to the financial performance or return of the product and
• disclose such risks and/or opportunities in communications that are intended for retail clients and that provide general information on risk and financial returns.

The products in scope of this requirement are the same as those in scope of public TCFD product reporting.

Under new rule ESG 2.3.1CG(2), where a product is in scope of both the climate disclosure rules regime and the Consumer Composite Investment (CCI) regime, a firm would be able to disclose materially relevant climate risks and/or opportunities as part of the risk and return information within a product summary.

Firms would not be required to disclose climate information for every product - under ESG 2.3.1BR, disclosure would only be necessary where the firm determines that climate risks and/or opportunities are materially relevant to the product’s financial performance or return.

Some in scope products, such as pension products, would not be required to produce a product summary.

The FCA proposals do not prescribe when firms should disclose material climate information – this will be determined by the publication timescale of the relevant communication.

(b) Communicating with institutional clients

The COP proposes to adapt ESG 2.3.5R and ESG 2.3.6R so that:

• firms must provide, at least, data on scope 1, 2 and 3 greenhouse gas emissions when requested by clients that need such information in order to satisfy their climate disclosure obligations and
• clients could only request this information once per calendar year, per product.

All products in scope of current public and on-demand TCFD product reporting requirements are in scope of this requirement as institutional clients need information across a range of products but would no longer have access to it from public TCFD product reports.

The FCA is also proposing to reduce the metrics required under ESG 2.3.5R down to scope 1, 2 and 3 GHG emissions (at a minimum) rather than the wider set included in TCFD product reports, since the retained metrics allow clients to calculate other climate metrics as needed under their own climate disclosure obligations.

ESG 2.3.8G would be kept, albeit as guidance, rather than a rule – this encourages firms to provide other metrics if reasonably required by the client for their climate reporting.

Although the end result of the changes is likely to be that there is less information available in the market, market feedback indicates that the proposed regime would meet the needs of institutional clients while being proportionate for firms.

Under ESG 2.3.7AG, a firm would be required to provide information in a timely manner and in a format meeting the needs of clients.

New ESG 2.3.8AG would clarify that a firm should not disclose information to clients where there are data gaps or methodological challenges that cannot be addressed through the use of proxies or assumptions without the resulting information being misleading.

(These provisions are to be found in the current ESG 2.1 rules that apply to TCFD product reporting, but are being changed to guidance.)

Consequential amendments

As a result of the above changes, a number of consequential amendments would be needed to other areas of the FCA Handbook, notably, the Environmental, Social and Governance (ESG) sourcebook and the Collective Investment Schemes (COLL) sourcebook.

These changes generally aim to reduce interlinkages and simplify the new disclosure requirements.