UK: FCA consults on simplifying product-level TCFD disclosures

A key – and persistent – consideration in the sustainable finance world is the gap between disclosure requirements and investor usability and comprehension. This is one of the issues that sits at the heart of the latest FCA consultation (published on 5 June 2026) which proposes changes to simplify existing product level TCFD disclosures (see the changes set out in Chapter 2 and Appendix 1 of FCA Quarterly Consultation CP27/17). 

Background

The consultation comes off the back of concerns that existing rules result in disclosures that are “too complex” for retail investors to engage with.  The FCA reported back in August 2025 (see our blog post) on its review of how its climate disclosure rules had been working for firms.  It is a positive, that the FCA’s rules have increased firms’ consideration of climate risks and supported their integration into firms’ decision-making – the FCA’s review reported also that the rules have helped firms be more transparent with their clients and consumers.  However, usability is an important consideration – with suggestions raised that the FCA’s current sustainability disclosures could be simplified and streamlined amid concerns that they are too granular.  Indeed, key observations include that whilst detailed climate disclosure information is helpful for institutional investors, the level of engagement from retail investors indicates that such investors find them too long and complicated to understand or to be decision-useful – the granularity of the rules therefore introducing an unnecessary and disproportionate burden for firms.  It is for this reason that the FCA is reviewing its product level disclosure requirements – with a view to easing unnecessary burdens, improving the decision-usefulness of reporting and ensure international alignment.

A more flexible regime — what this means in practice

In a nutshell the new proposals aim to replace many of the existing TCFD product-level reporting requirements (primarily set out in FCA Handbook ESG 2.3) with more targeted outcomes based requirements. 

For retail investors, the FCA proposes a more flexible disclosure regime which would require firms to:

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

• where any risks and/or opportunities are identified, disclose them in their communications to retail investors that provide general information on risk and financial return.

For products that are in scope of the CCI regime, this could involve disclosure via the product summary (as part of the risk and return information therein) – but this is not explicitly mandated.  For products outside of the scope of the CCI rules, firms have flexibility to include climate information in other communications to retail investors that include general information on risk and financial returns (the FCA is not prescribing a timeline for such disclosure, as this will be determined by the publication timescales of the relevant communication). 

In terms of scope, the products in scope remain unchanged from the products in scope of the current public TCFD product reporting rules.  It is the FCA’s expectation that firms will meet the requirements for periodic consideration through their existing processes for identifying and monitoring financial risk. 

The new rules ensure that retail investors will receive relevant information on how material climate risks could affect a product’s financial performance, whilst introducing flexibility for firms on how this information is reported.  There may be concerns that this flexibility introduces greater difficulty for retail investors in comparing different products – however on balance, in our view this is information which retail investors will want to consider holistically alongside the other material risks relevant to their investment and in light of its impact on their investment returns.  Therefore, setting it alongside that other material risk information as part of risk and return disclosures (in the product summary for CCI products) seems an optimal choice in terms of introducing clarity and decision usefulness for retail investors.

Meanwhile, for institutional investors with their own reporting obligations, the proposed rules are intended to support a coordinated flow of information along the investment chain. 

• The rules provide for mandatory emissions disclosure (covering at a minimum data on scope 1, 2 and 3 GHG emissions to be delivered by firms upon request by such clients. 

• Clients are only eligible however, to request this information once per calendar year, per product (which the FCA says is “in line” with the frequency of required reporting under the current rules) – albeit the rules do not specify the calculation date of, or the frequency with which firms are required to update, such data (this is a point that firms will no doubt want clarified in the final rules.  Where this is not explicitly dealt with in the rules, firms will need to ensure that this is covered in their contractual arrangements with such client firms). 

• FCA guidance sets the expectation that firms “should” (but no longer explicitly mandates) provide disclosure of other metrics where reasonably required by the clients for their climate reporting (subject to feasibility and contractual arrangements).   

• All products in scope of public and on demand TCFD product reporting requirements are in scope of the proposed rules. 

Next steps

The FCA consultation is open until 13 July 2026 (so firms do not have long to respond), with the FCA aiming to finalise and implement rule change in the autumn. 

The FCA press release is here

For more on the existing TCFC reporting requirements for Asset Managers life insurers and FCA-regulated pension providers, see our Quick Guide here