Green Wishers
The FCA’s Feedback Statement focuses on greenwashing, disclosure and integration of material climate change risks and opportunities into business, risk and investment decisions.


The Financial Conduct Authority (FCA) has published its Feedback Statement entitled ‘Climate Change and Green Finance: summary of responses and next steps, Feedback to DP18/8, Feedback Statement FS19/6’. The Statement reflects what the FCA refers to as its ‘evolving approach’ to regulation and supervision in the area of climate change and green finance.

The FCA Statement applies to all regulated firms, issuers, investors and their advisors. Its focus is on greenwashing, disclosure and integration of climate change risks and opportunities into business, risk and investment decisions. We recommend that firms undertake five key measures including complying with existing disclosure standards and reviewing internal data and analytics to ensure that they are able to meet expectations. These five points are explored at the end of the blog in the ‘key points for firms’ section.

A high level summary of the FCA’s objectives, actions and proposed timing appears in table 1. We consider some key topics in more detail below.

Table 1 Summary proposals and timing


Green financial products and services – expectations

The rapid and growing awareness of climate change, together with the role that the financial sector plays in supporting a transition to a greener economy, are factors that are contributing to a growth in consumer demand for green financial products and services. These products for example include green funds, green bonds, green loans and green mortgages.

With common metrics on products and sustainability standards still being in a developmental stage, and in a context where there is a growing public policy focus on green finance, the FCA is concerned about the potential for greenwashing.

‘Greenwashing’ refers to the practice where firms market/portray products, activities or policies as producing environmental outcomes, when this is not the case. The FCA’s early research on firms’ sustainable product offerings shows, for example, that sustainable labels are applied to a very wide range of products whereas ‘some of these do not appear to have materially different exposures to products that do not have such a label’.

The FCA therefore uses its Statement, in our view, to signal its growing interest in this area to firms, as demonstrated also by its planned future policy work. The latter will focus on governance and the design of sustainable products and may result in the introduction of further rules and guidance.

More immediately, the FCA specifically clarifies that:

  • for authorised fund managers, Policy Statement 19/4 includes non-handbook guidance clarifying that a fund should set out clearly in its Key Information Document (KID) if it pursues environmental, social or other non-financial objectives (NFO) and importantly how it does so;
  • this should be done in a way that is fair, clear and not misleading; and
  • fund managers need to be clear on how they will measure whether those objectives are being met, whilst providing ongoing information to investors.

The FCA additionally notes that ensuring that consumers and investors are not misled or mis-sold green products will remain an ‘active area’ of focus in both its supervisory and policy work. This is an area in which firms marketing sustainable products and services can therefore expect to see the FCA ‘challenging’ them, where it sees ‘potential greenwashing’.

Finally, the FCA notes in the light of UK withdrawal from the EU, that it is monitoring and engaging with the outputs from the SFAP (i.e. Taxonomy, Disclosure and Benchmarks Regulations, and MiFID II amendments in relation to suitability assessments). Going forward, the FCA notes that these outputs can be expected to ‘underpin’ approaches in the UK. It is additionally monitoring industry initiatives, including those of the British Standards Institution and Investment Association.


Disclosure - issuers and regulated firms

The Statement also addresses climate-related disclosures from listed issuers and regulated firms. We summarise the proposals in the table 2 below.

Table 2 Disclosures by regulated firms and issuers

Climate risks – design and delivery of products

Finally, the FCA wants to ensure that firms integrate consideration of long-term climate change risks and opportunities into business, investment and risk decisions they make, where this is appropriate.

 FCA’s four focus areas
Climate Risk

On stewardship, the FCA notes that it intends to engage with firms on this as part of its supervisory work. It has also since published its Feedback Statement (FS19/7) on this topic, whilst the Financial Reporting Council has published its revised edition of the UK Stewardship Code. The FCA’s Statement notes that the FCA does not intend to impose further stewardship-related requirements on life insurers and asset managers at this time. The rationale for this is to provide firms with the opportunity to adapt to new rules on shareholder engagement and other related measures. The FCA does however proceed to set out future work on addressing barriers to good stewardship. This covers four key areas: 1) clear purpose, 2) constructive oversight, engagement and challenge, 3) culture and institutional structures supporting stewardship, and 4) disclosure and transparency.

The FCA’s Climate Change and Green Finance paper also notes that it will ‘further consider the role of firms’ culture, governance and leadership in ensuring that firms appropriately take action to manage the risks of climate change and support the transition more widely’. This statement is silent on exactly what this entails, though notes that it ‘could be’ informed by the Prudential Regulation Authority’s Supervisory Statement on Climate Risk. This may entail enhanced expectations for Senior Management Function holders that build on those set out in the Supervisory Statement.

In the case of climate change and other ESG risks relating to workplace personal pension schemes, the FCA plans to publish its policy statement and final rules later this year. These will address rule changes to require IGCs to consider and report on firms’ ESG and stewardship policies.

Other areas covered by the paper include proposed fact finding work on ESG data service providers, the removal of barriers to long‑term investment (through publication of a feedback statement and final rules on changes to permitted links rules in ‘due course’), facilitation of innovation, and the FCA’s approach to joint work with industry internationally.


5 Key points for firms

Point 1

Communicate about your sustainable products in a way that is fair, clear and not misleading, through ensuring that you

  •  Clearly articulate your ESG credentials – in the case of authorised fund managers, this should include disclosures in the KID on any ESG/NFO.
  • Clearly explain how you achieve your ESG/NFO objectives.
  • Are clear on how you measure ESG/NFO performance and provide ongoing information to investors.

Point 2

Minimise greenwashing conduct risks  

 Possible ways to achieve this is include:

  • Reviewing green products’ alignment with evolving EU Taxonomy definitions, keeping in mind that these are not yet finalised.
  • Complying with existing voluntary industry product standards when you structure and market products – these include for example the LMA Green Loan Principles and ICMA’s Sustainability Bond Guidelines, and seeking external assurance over this.
  • Using benchmarks to demonstrate green and sustainable product definitions.


Review your TCFD implementation plans so that they align with Government/Regulatory timelines

  • The FCA’s consultation on disclosure proposals for ‘certain listed issuers’, along with its clarification with regards to existing disclosure obligations, are due in 2020 – applicability dates are yet to be confirmed.
  • There is also an expectation by the Government and Regulators that all listed issuers and large asset owners should disclose in line with TCFD by 2022.


Ensure all material climate risks are disclosed in line with existing duties and standards and that you will be in a position to meet the upcoming timelines for mandatory TCFD disclosure. Ways you can do this include:

  • Establishing a working group, if you’ve not already done so. This should include relevant parts of the business, key personnel and should have appropriate geographical representation.
  • Informing executive stakeholders about emerging climate risk management expectations.
  • Reviewing the adequacy of your internal data and analytics.
  • Identifying material climate risks and establishing a plan for managing these.
  • Establishing a strategy with immediate and long term objectives.
  • Understanding relevant and plausible scenarios that should be applied to the business, to understand impacts of transitional and physical risks.


Focus on addressing common TCFD disclosure shortcomings. You can     do this by:

  • Increasing the quantity and quality of your disclosures.
  • Refining disclosure metrics to determine which ones are most decision-useful.
  • Improving your assessments of strategic resilience.
  • Considering how you disclose the extent to which portfolios are ready for the transition to net zero.

Katherine Lampen

Katherine Lampen - Head of UK Sustainability Services, Strategic Risk Advisory

Katherine leads Deloitte’s UK Sustainability Services practice.

She has over a decade of experience in Financial Services, serving as senior advisor to leading FSIs on sustainability and climate risk, and regularly contributes to the sustainability and green finance agenda - with standard setters, industry bodies, and through multi-stakeholder initiatives.

Email | LinkedIn

Tasha Clarbour

Tasha Clarbour - Sustainable Finance lead, Sustainability Services, Risk Advisory

Tasha leads Deloitte’s sustainability services’ sustainable finance offerings.

She has spent the last decade advising banks, insurers and investment managers on sustainability and climate risks, helping clients find focus through their sustainable finance strategy and solutions; implement these; and effectively communicate their approach and performance to the market.

Email | LinkedIn

Rutang Thanawalla

Rutang Thanawalla - Director (Financial Services - Risk Advisory)

Rutang is a Director in the Financial Risk Measurement practice within Deloitte UK's Risk Advisory group for Financial Services. He leads on assignments in Enterprise-wide Risk Management, notably Stress Testing and Climate Risk Analytics drawing on his experience in banking, insurance, a global credit rating agency and the energy sector. Rutang has a PhD in a quantitative discipline, has worked on a range of analytical solutions relevant to risk management, from risk modelling and model validation to data-led initiatives such as building market indices from scratch.

Email | LinkedIn

Hina Majid

Hina Majid - Senior Manager, EMEA Centre for Regulatory Strategy

Hina Majid is a senior manager in the EMEA Centre for Regulatory Strategy. She specializes in sustainable finance and capital markets regulation/policy. She is a qualified lawyer and holds: an LLM in banking law and financial regulation (LSE), an MSc in human rights (LSE), Certificate in Business Sustainability Management (Cambridge University) and the Certificate in Green Finance (Chartered Banker Institute). She has previously worked for various wholesale banks and in the not for profit sector on human rights issues.

Email | LinkedIn


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