Investment firms could save around £20m a year under new proposals from the FCA to simplify climate reporting for investment products.

The FCA estimates it could deliver these savings by replacing detailed product-level reports based on the Task Force on Climate-related Financial Disclosures (TCFD) with simpler, more targeted information for retail investors, in line with the Consumer Duty. TCFD product reporting was introduced in 2021 as part of the UK’s approach to climate disclosures.

The changes aim to give investors clearer insight into how climate risks, such as floods, storms and other extreme weather events, could affect investment performance, while reducing unnecessary costs to firms.

Michelle Beck, director of wholesale buy-side at the FCA, said: “As part of being a smarter, more proportionate regulator, we’re cutting complexity in our rules for asset managers, while keeping the focus on clear, useful information for investors.”

The proposals follow a review of how the current rules are working. The FCA found that while the rules have improved firms’ awareness of climate risks, product-level reports are often seen as too complex by investors and not widely used.

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