Carbon Tracker and Assurance Mark were given the opportunity to comment on the FCA’s above-referenced proposals (the “Consultation”) relating to the Financial Stability Board’s (FSB) Taskforce on Climate-related Financial Disclosures (TCFD).

The TCFD recommendations call for companies to provide a discernible “throughline” between climate-related risks and corporate financial reporting.

Well managed companies recognize the through line in their internal financial planning, but there are few incentives to consistently apply these assumptions in external financial reporting.

The FCA should not shy away from addressing the forward-looking assumptions embedded in corporate reports.

The FSB’s TCFD recommendations provide a useful starting point for including climate risks in mainstream financial reports, and the FCA’s efforts put it ahead of many micro-prudential regulators. But the FCA can and should follow the through-line from internal financial planning to external financial reporting and improve issuer disclosure of how climate risks are embedded in financial statements.