In a welcome announcement, the UK’s Financial Conduct Authority (FCA) recently announced its intentions to streamline and enhance reporting requirements under the Taskforce on Climate-related Financial Disclosures (TCFD) and the forthcoming Sustainability Disclosure Requirements (SDR) rules for asset managers.
The FCA has finalised its multi-firm review assessing how the existing TCFD-aligned rules have performed since their implementation in January 2022. This included an evaluation of several entity-level and product-level reports to date, as well as incorporating industry feedback to consider the effectiveness, challenges and engagement with the current disclosure regime.
FCA’s key findings on TCFD Reporting
The FCA’s research concluded that its climate disclosure rules meaningfully advanced firms’ integration of climate risk and improved transparency. However, the review also highlighted areas where the regime could be refined to improve usability, consistency and proportionality. For example, data relating to forward-looking disclosures (such as scenario analysis) was more challenging to report on and other rules were considered too granular and duplicative by asset managers. Equally, the highly technical nature of the requested disclosures and some online accessibility issues contributed to limited engagement with retail investors, especially for product-level reports.
FCA’s next steps
Having already updated its guidance for asset managers, the FCA intends to ‘streamline and enhance’ its sustainability reporting framework further to:
- Simplify disclosure requirements and ease unnecessary burdens on firms.
- Maintain good outcomes for clients and consumers and improve the decision-usefulness of reporting, building on the work of SDR to improve trust and reduce greenwashing.
- Promote international alignment and help maintain the UK’s position as a global leader in sustainable finance.
This includes consideration of ‘sustainability reporting as a whole’, namely the endorsement of the International Sustainability Standards Board (ISSB)’s reporting standards (known as UK Sustainability Reporting Standards) and developments on net-zero transition plans.
UK Government consultations
The FCA’s move comes amid a wave of related UK government consultations around sustainability reporting, including on:
- Sustainability reporting standards: proposing to adopt the ISSB’s sustainability standards to minimise divergence and promote international comparability, particularly for economically significant companies.
- Sustainability reporting assurance: proposing to introduce a regulated assurance regime for sustainability-related financial disclosures, overseen by a proposed new Audit, Reporting and Governance Authority (ARGA).
- Climate-related transition plans: proposing to introduce mandatory disclosure for businesses to demonstrate how they plan to align their operations, strategies, and business models to align with the 1.5°C goal of the Paris Agreement.
Jupiter’s Response
Jupiter supports efforts to build a more streamlined disclosure regime that maintains robust standards, while improving decision-usefulness for clients.
“As an asset manager navigating increasingly complex regulatory demands, we welcome the FCA’s intention to simplify its sustainability reporting rules. It is a strategic opportunity to recalibrate how firms communicate material sustainability information to its stakeholders.” Tom Owen, Head of Legal
However, “it is essential that new rules avoid duplication and reflect the practical realities of data availability and methodological development, particularly in light of the ongoing consultation from the Net Zero Asset Managers initiative.” Rowan Buchanan, Corporate Sustainability Manager
Jupiter intends to respond to the government’s suite of consultations by September 2025, broadly in support of the position of the Investment Association. We will continue to monitor the FCA’s developments closely and contribute to the dialogue to ensure the emerging regime supports high-quality, globally relevant and investor-focused reporting, in line with Jupiter’s client-centric approach.
Jupiter currently produces TCFD reports at a Group level, integrated into our annual Sustainability Report, as well as standalone Entity and Product level TCFD Reports, which can be found on our website here. Additionally, two of our UK-domiciled funds adopted sustainability labels under the Financial Conduct Authority’s (FCA) new Sustainability Disclosure Requirements (SDR) regime, and we intend to produce our first SDR report by the end of the year.
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