The Financial Conduct Authority (FCA) on Tuesday told financial firms and listed companies in Britain to push ahead with drawing up plans for transitioning to a net-zero economy before formal rules are finalised.
This is coming after the FCA had mandated asset managers and listed companies to publish climate-related disclosures since January 2022, albeit such would be on a comply or explain basis.
A government-backed net-zero review published last month said plans to date based on the disclosures have varied in quality and lack detail on short-term actions to meet net-zero goals as Britain’s Transition Plan Taskforce (TPT) is developing mandatory standards for listed companies and financial firms to ensure comparable plans, with the work completed by the end of this year.
According to Mark Manning, a sustainable finance specialist at the FCA, listed companies and firms regulated by the watchdog should be using the TPT’s draft guidance, currently out to public consultation, to write plans which will get feedback from the regulator.
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“Ultimately we can’t wait for perfection here. Increasingly, a company’s transition plan is financially material information, material to a company’s future prospects,” Manning was quoted as saying at a conference.
According to Manning, the new plans will help regulators combat greenwashing, or companies making statements on cutting carbon emissions without backing them up. He said that once the TPT final guidance is published, the FCA will set out stronger expectations on compliance.
The plans dovetail with company sustainability disclosures being rolled out in the European Union, the United States and globally by the International Sustainability Standards Board (ISSB) over coming months for use in annual reports for 2024.
Patrick Arber, a member of the TPT’s delivery group, said companies should not wait for absolutely perfect guidance on plans to be finalised.
“Don’t fear having a go,” Arber said.
The Glasgow Financial Alliance for Net Zero or GFANZ, a global financial industry body, has also worked on transition plan guidance for the sector.
Story was adapted from Reuters.
