UKSIF Response: FCA’s consultation on TCFD-aligned disclosures for asset managers and others

Oscar Warwick Thompson
Oscar Warwick Thompson9th September 2021

UKSIF is pleased to respond to this very important consultation from the FCA on TCFD-aligned disclosures for asset managers and others, and some of the main points in our response are as follows:

  • UKSIF and our members support the vast majority of the FCA’s proposals, including the scope for firms, timeframe for implementation, and core list of metrics identified, and we warmly endorse the direction of travel outlined. Our response does highlight some concerns on certain detailed implementation challenges for parts of the sector, especially smaller firms, including on providing granular product-level disclosures for certain asset classes, beyond equities, and scenario-analysis requirements.
  • We believe consideration could be given by the FCA in future to lowering the threshold to capture a wider group of managers in future, including boutique firms over time. There will be a number of boutique managers, which fall below the proposed £5bn threshold that will widely market ESG products and funds with sustainability characteristics, and we strongly believe savers should have clarity over as wide range a scope of products offered by firms as possible, making the case for an extended scope in future.
  • We would support the regulator actively encouraging larger managers to publish TCFD reports ahead of the June 2023 deadline, and we believe in a ‘comply and explain’ approach for firms not yet setting climate-related targets in their disclosures. One reason is different portfolios, investment strategies, and asset classes will have very different pathways to net-zero and reach a climate target in a very different manner.
  • Overall, we expect the first several years of TCFD reporting to be complex for the sector and create a lot of ‘noise’ for clients, but we hope reporting to improve in the years ahead and for disclosures to become much more ‘decision-useful’ for investors.
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