Carbon Tracker has responded to the FCA’s consultation on the new Public Trading Offers and Admissions to the Trading Regulations regime (POATRs). Our submission builds upon our response to the regulator’s 2023 call for feedback on updating UK prospectus regulation.

Currently fossil fuel companies on the London Stock Exchange do not currently consider “carbon budgets” or demand scenarios consistent with the Paris Climate goals. This leaves investors un-necessarily exposed to the risk of losses due to an overstatement of profit and dividend potential.

As per our last submission, we encourage the regulator to extend current mandatory requirements to disclosures of material climate-related risk, particularly for fossil fuel producers (and their assumptions about the future where the energy transition is concerned), to enable better decision-making and ensure that investors have sufficient, reliable, relevant and comparable information about a company’s financial risk and companies’ securities.

We welcome the regulator’s decision to include our proposal for a new climate test in our 2023 submission (and Client Earth’s) as part of the 2024 consultation paper (see para 6.45). We focus our response on Question 40, making the case for additional prospectus disclosures for “mineral companies” and advocating for the inclusion an Atmospheric Viability Test within the Competent Person’s Regime, specifically for assessing the future financial viability of fossil fuel-based reserves such as coal, oil, and gas against IEA net zero scenarios. Our consultation response is available to download on this page.

Following the publication of the FCA consultation, Carbon Tracker launched an investor call to action to encourage investors to engage with the FCA on the proposal introduce a climate-related disclosure rule to sit alongside existing geological and economic assessments of fossil fuel reserves. We engaged with investors, investor networks and civil society organisations as part of this campaign and estimate that those representing nearly $100trn of AUM responded to the consultation. We also prepared an investor response template and investor briefing to inform investors about the proposed Atmospheric Viability Test and how it could support market integrity, financial stability and efficient capital markets.

We now look forward to hearing how the FCA will respond to these submissions. We don’t expect this – as part of their overall next steps – until the New Year.

“This is an important initiative that will force fossil fuel companies to disclose why they believe the development of their reserves, and ultimately their long-term strategies, would be scientifically consistent with the goals of the Paris climate agreement.” – Adair Turner, ETC Chairman.