FCA consults on simplifying product-level climate disclosure requirements

The FCA has set out proposals to simplify product-level climate disclosure requirements applying to asset managers, life insurers and FCA-regulated pension providers in its latest Quarterly Consultation Paper (No. 52) (CP26/17), published on 5 June 2026.

In a move that should lighten the product-level reporting burden on asset managers and asset owners alike, in-scope firms would no longer be required to prepare TCFD product-level reports. Instead, less onerous reporting requirements would apply to communicating with both retail and institutional clients with the FCA pivoting to a less prescriptive, outcomes-based approach.

In the paper, the FCA recognises that TCFD product reports are “too long and complicated” for retail investors to understand and that institutional investors “typically obtain [climate reporting] by engaging directly with firms rather than [via] the public [TCFD product] reports”. 

The FCA has requested industry comment by 13 July 2026 with a view to finalising any rule changes in Autumn 2026.

Background

In 2021, the FCA introduced climate disclosure rules for asset managers, life insurers and FCA-regulated pension providers. These rules were based on the Taskforce on Climate-related Financial Disclosures (“TCFD”) recommendations and required firms to publish annual entity-level and product-level reports. 

The FCA reviewed these rules in 2025 and found that investor engagement with the product reports was low with retail investors finding the product reports too long and complicated and institutional investors typically obtaining the necessary data for their own climate reporting by engaging directly with firms, rather than via the mandated product reports. 

While firms acknowledged that product-level TCFD reporting had helped to raise awareness of climate risks in the market, they did not consider product-level TCFD reporting to be a useful climate risk management tool as they had their own methods of identifying and monitoring these risks. 

They also noted that the reports were costly to produce and the rules put UK investment products at a disadvantage as non-UK investment products are not subject to the same requirements.

The Proposals

As a result, the FCA now proposes to remove TCFD product-reporting requirements and to replace them with more targeted, outcomes-based rules for communications with retail and institutional clients.

Retail Investors

The revised rules would require in-scope asset managers and asset owners to:

• consider periodically whether climate risks and/or opportunities could be materially relevant to the product’s financial performance or return; 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.

New guidance would expressly note that firms may (but are not required to) carry out this requirement as part of their usual risk assessment procedures. For many asset managers, considering climate risks now forms a BAU part of their product-level risk management, so this could form a welcome process efficiency.

The FCA also suggests that, for firms which are also in scope of the incoming Consumer Composite Investment (“CCI”) rules, such disclosure might form part of the ‘risk and return information’ disclosed within a CCI’s product summary. This would, of course, be separate and in addition to the sustainability disclosures, prepared under ESG 5.1.1R in respect of the CCI, (or links to such disclosures) which form part of the ‘general product information’ in the product summary.

Institutional Investors

Under the revised rules:

• in-scope asset managers and asset owners would be required to provide, at a minimum, data on scope 1, 2 and 3 greenhouse gas (“GHG”) emissions when requested by clients that require such information to satisfy their climate disclosure requirements; and
• clients would only be eligible to request this information once per calendar year, per product.

Although all products currently in scope of the existing public and on-demand TCFD product reporting rules would remain in scope of the revised rules, the scope of information / metrics required would be reduced, relative to the current rules.

However, firms will be encouraged to provide other data if reasonably required by the client for their own reporting. Firms will still be required to provide information in a timely manner and in a format that meets clients’ needs. Firms should not disclose information to clients where there are data gaps or methodological challenges that cannot be addressed using proxies or assumptions without the resulting information being misleading.

The proposals also include a number of consequential amendments to the ESG and COLL sourcebooks.

What does this mean in practice for asset managers and asset owners?

The proposals seem to afford asset managers and asset owners greater flexibility in how they communicate product-level climate-related information with retail investors. We expect there to be material reductions in the administrative burden and cost of such reporting, to the extent that asset managers and asset owners no longer need to produce a TCFD product-level report.

For disclosures to institutional investors, the proposals would cause the baseline to shift from a full TCFD product report to just data on scope 1, 2 and 3 GHG emissions. If institutional investors settle for receiving scope 1, 2 and 3 GHG emissions data, then the reporting burden should reduce for in-scope firms. If those who previously settled for TCFD product-level reporting consider, however, that they need more than scope 1, 2 and 3 GHG emissions data, then asset managers and asset owners may be required to consider new asks, which could see a period of adjustment while market expectations settle (even where fulfilment of such asks is not mandatory). Where this lands will determine quite how far the reporting burden is really reduced.

Next steps

The FCA has requested industry comment by 13 July 2026 with a view to finalising any rule changes in Autumn 2026.