The Financial Conduct Authority will highlight to issuers the need to disclose sustainability information able to affect the valuation of a listed company’s securities.
That’s according to the group’s response to the Environmental Audit Committee’s (EAC) report on how to drive green finance and embed sustainability in financial decision making.
The FCA says it will work with companies and investors to monitor progress in this area and adds it intends to consult on rule changes in the first quarter of 2019 requiring Independent Governance Committees to report on their firm’s environmental policies.
It also plans to consult on introducing guidance for providers of workplace personal pension schemes on considering financial factors such as environmental risks and climate change when making investment decisions.
The FCA stresses it conducts wholesale reviews of risk as part of its usual activities, including medium to long term analysis to understand emerging risks across the financial markets it regulates.
The organisation added: “We are conscious of the range of ways in which climate change risks may impact the markets and sectors we regulate and are working to understand how we can effectively respond within the scope of our regulatory remit.”
Mary Creagh MP, Chair of the EAC, said: “We are pleased that the FCA is acting on one of our recommendations and is consulting on rule changes that would require the Independent Governance Committees of contract-based pensions to report on how they manage environmental risks and how they take account of members’ ethical concerns.”