The Financial Conduct Authority (“FCA”) has recently received an influx of applications for the authorization of climate-related funds. However, the Authority has deemed the majority of these to have serious shortcomings. In a bid to ensure quality applications, as well as full compliance with FCA standards, the Authority has recently published two Policy Statements, targeted at ESG-related investment funds. These guidelines mainly promote climate-related financial disclosure.
The FCA’s new Policy Statements are aimed at increasing transparency regarding how firms are managing climate-related risks and opportunities, so that clients and consumers are empowered to make informed decisions. The new guidelines require climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers.
The Authority believes that this, in turn, will enhance market competition, benefiting consumers and offering protection from unsuitable products, while simultaneously driving investment toward greener projects and activities.
The new climate-related disclosure rules, requiring mandatory disclosures on an annual basis at entity and product level, have come into effect as of January 1st, 2022.The evolution of climate litigation is driving a shift in the parameters used to evaluate the conduct of directors and officers. While climate change was previously perceived as an ethical or reputational externality, it is now configured as a "foreseeable" and, therefore, actionable legal risk.
In 2025, global investments in the energy transition reached a record $2.3 trillion, marking an 8% increase compared to the previous year. Despite this acceleration, the path toward the net-zero target is estimated to require approximately $30 trillion in additional capital, encompassing corporate investments and infrastructure, to decarbonize the eight high-emitting industrial sectors that alone generate 40% of global greenhouse gas emissions by 2050.
Climate litigation has matured into a systemic business risk with direct implications for corporate strategy, governance, capital allocation, and market access. Companies are now expected to take responsibility for their emissions, environmental impacts, and climate risks, moving beyond direct operations to encompass the entire asset lifecycle and the broader value chain.
DISCLAIMER: the content of this news is for informational purposes only and neither represents, nor can be construed as a legal opinion