FCA Reshapes Product Climate Reporting

Product-level climate disclosure is entering a usability test. The question is no longer only whether climate data is published, but whether it reaches investors in a form they can use.

The Financial Conduct Authority (FCA) has proposed removing TCFD product reporting requirements for asset managers, life insurers and FCA-regulated pension providers. Published on 5 June 2026, the proposal tests whether product-level climate information works better as a standardised public report or as targeted disclosure linked to investor use, product communications and client data requests.

The change is from annual product reports built around TCFD metrics and scenario analysis to rules based on financial materiality and client type.

What the FCA Wants to Change

The proposal sits in Chapter 2 of Quarterly Consultation CP26/17, with draft changes set out in the Disclosure of Climate-Related Financial Information (Asset Manager and Asset Owner) (Amendment) Instrument 2026. The consultation is open until 13 July 2026, and the FCA aims to finalise and implement the rule change in the autumn.

The current rules, introduced in 2021 under PS21/24, require annual entity-level reports and product-level reports containing carbon metrics and climate scenario analysis. The proposal concerns product-level reporting. ESG 2.1 would become “Preparation of TCFD entity reports”, with product-level TCFD reporting and product-level scenario analysis removed from that section.

Entity-level disclosure rules remain outside CP26/17, although the FCA says it will continue to explore opportunities to streamline them.

Why the FCA is Questioning Product Reports

In 2025, the FCA carried out a post-implementation review of firms’ TCFD disclosures. The review covered 10 entity reports and 77 product reports from 8 entities, with further engagement across trade associations and 7 in-scope firms.

The findings show a gap between regulatory intent and use. Firms reported low engagement with TCFD product reports, especially among retail investors. Consumer groups told the FCA that retail investors found the reports too long and complicated, while still wanting to understand how climate change could affect investments.

Access was part of the problem. The FCA found that entity reports were broadly accessible from firms’ main webpages, but product reports were often difficult to find. Scenario analysis also appeared uneven: only around half of the product reports reviewed disclosed the impact of all three climate scenarios on the fund, as required.

Retail Disclosure Becomes Materiality-Led

For retail clients, the FCA proposes replacing public TCFD product reports with ESG 2.3.1BR. Firms would periodically consider whether climate risks or opportunities could be materially relevant to the financial performance or return of the product. Where they are, firms would disclose them in communications for retail clients that provide general information on risk and financial returns.

The product scope remains unchanged from the current public TCFD product reporting scope. The FCA says firms may use their usual risk assessment procedures for the periodic assessment. For products also in scope of the Consumer Composite Investment (CCI) regime, relevant climate risks or opportunities could sit within the risk and return information in the product summary.

The FCA does not expect climate information for every product. Disclosure is required only where the firm determines material relevance to financial performance or returns. When firms disclose to retail investors, the FCA also refers them to the consumer understanding outcome under the Consumer Duty.

Institutional Disclosure Narrows to Emissions Data

For institutional clients, the FCA proposes retaining a regulatory basis for data access. Firms would provide, at a minimum, Scope 1, Scope 2 and Scope 3 greenhouse gas emissions data when requested by clients that need the information for their own climate disclosure obligations. Requests would be limited to once per calendar year, per product.

Under proposed ESG 2.3.4AR, this would cover products a firm manages, operates or provides, investments for which a firm provides portfolio management, and assets under management in an unauthorised AIF where the relevant investor route applies.

The required metrics would narrow from the wider TCFD product report content to Scope 1, Scope 2 and Scope 3 GHG emissions data. Guidance would encourage firms to provide other metrics where reasonably required by the client, subject to feasibility and contractual arrangements. Firms should not disclose information where data gaps or methodological challenges cannot be addressed without making the result misleading.

Cost and Proportionality

The FCA has not conducted a formal cost benefit analysis. It says any increase in costs would be of minimal significance because the simplified rules do not impose new obligations on firms.

Instead, the FCA estimates that removing TCFD product reporting would reduce costs for 261 asset managers and about 34 asset owners managing around 9,000 products. It estimates ongoing industry savings of about £20 million per year, with a present value of about £174 million over a ten-year appraisal period.

What Reporting Teams Should Watch

If finalised, the proposed retail rule would turn product-level climate disclosure into a documented materiality judgement. Firms would need to clarify who owns that judgement, how it links to existing risk processes, and what evidence would support decisions where no climate disclosure is made.

The institutional route would place more weight on product-level emissions data. Scope 1, Scope 2 and Scope 3 GHG emissions would become the minimum dataset for requests, so firms should test which data could be supplied once per year, what assumptions sit behind it, and where gaps or methodological limits could make disclosure misleading.

Disclosure controls may also need review. Product summaries, risk and return communications, SDR product-level sustainability reports, fund reports and client reporting packs may all carry parts of the climate message. The test would be whether those channels can remain consistent if the proposed rules are finalised.

The practical shift, if the FCA proceeds, would be from reliance on a standalone product report to documented judgement, data controls and consistency across client-facing disclosures. The next point to watch is how far the final rules preserve flexibility, and how the FCA describes the evidence firms should hold behind that flexibility.