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.