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FCA considers finance firm requirement to report on climate risk management

  • 15/10/2018
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FCA considers finance firm requirement to report on climate risk management
The Financial Conduct Authority (FCA) is looking at whether financial services firms should publicly report on how they manage climate risks, as the regulator considers environmental impact in the sector.  


The watchdog also wants to make sure the market for ‘green finance’ is competitive and able to grow, as the transition to a low carbon economy and financial products on offer could change.

A discussion paper with four areas, including the two outlined above, has been issued by the FCA.

The FCA also looks at how investments in pensions will be need to take account of climate change risk and how to make sure investors are given information about the impacts of change.

At the same time, the Prudential Regulation Authority’s (PRA) has published a consultation on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change.

The two bodies are also setting up a Climate Financial Risk Forum, with membership finalised by the end of November and the first meeting to take place in early 2019.

Andrew Bailey, chief executive at the FCA said: “Climate change presents a disruptive and potentially irreversible threat to the planet.

“The impact of climate change on financial markets is uncertain but legal frameworks – at a global, European and UK level – have already begun to adapt to reflect a move to a low carbon economy.

“The FCA can play a key role in providing more structure and protection to consumers for green finance products and ensuring that the market develops in an orderly and fair way which meets users’ needs.”

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