FCA TCFD product reporting proposals: what CP26/17 changes for funds

The Financial Conduct Authority (FCA) wants to remove mandatory public climate reports for thousands of UK investment products. Under its CP26/17 proposals, retail investors would receive shorter information about financially material climate risks, while qualifying institutional clients could still request emissions data. The consultation closed on 13 July 2026 and the rules have not yet been finalised.

The proposal is narrower than a retreat from climate reporting. Entity-level reports for asset managers, life insurers and regulated pension providers would remain. The change concerns the detailed product reports introduced under the Task Force on Climate-related Financial Disclosures (TCFD) regime in 2021.

Those reports contain standard carbon metrics and climate analysis, but the FCA's review found that retail engagement was low and the documents were often considered too long and complicated. Its proposed replacement makes a different trade: less standard public product data, but more discretion to explain the climate information that is material to a product's financial performance.

What the FCA is proposing

The scope of the products covered by the proposed retail requirement would stay broadly the same. What changes is the format and trigger. A firm would periodically consider whether climate risks or opportunities could materially affect a product's financial performance or return. If they could, the firm would explain them in communications intended for retail clients that already discuss risk and financial returns.

The FCA says that information could sit inside the product summary used under the Consumer Composite Investment regime where both sets of rules apply. Pension products and other products without that summary could use a different suitable communication. The regulator is not proposing that every product carry a climate section regardless of relevance.

Why the existing product reports are being reconsidered

The current rules were built around three aims: better investment decisions, deeper consideration of climate risk by firms and a flow of comparable climate information through the investment chain. The FCA's 2025 review found different results across those aims.

Firms said the regime had increased awareness of climate risk. Institutional investors, including pension trustees, still use emissions information to meet their own reporting duties. But retail investors rarely engaged with the product reports, and consumer groups told the FCA that the documents were difficult to understand.

Institutional users also tended to obtain data directly from managers rather than rely on public reports. A tailored request can match a pension scheme's own calculation date, portfolio boundary and reporting method more closely than a general document produced for every reader.

That evidence explains the proposed split between audiences. The open question is whether a more useful retail disclosure can compensate for the loss of a standard public record.

What retail investors may gain

A shorter disclosure could make the financial consequence easier to see. A fund with material exposure to flood-prone property, carbon-intensive manufacturers or businesses vulnerable to abrupt policy change may need to explain how that exposure could affect returns. The communication would have to meet the consumer-understanding outcome of the Consumer Duty.

This is different from presenting five carbon metrics without showing how they connect to the investment. A weighted average carbon intensity figure can help compare portfolios, but it does not by itself explain whether a manager sees the exposure as temporary, intends to engage with companies, has changed the portfolio or considers the risk financially material.

More flexible wording can therefore be useful when it connects climate risk to the product a person is considering. It also creates more room for variation between firms. Investors may receive clearer explanations, but not necessarily information in the same place, on the same date or in the same format across competing products.

The sustainable fund factsheet checklist remains relevant because the proposed climate disclosure would be one part of a wider product decision. Objective, holdings, benchmark, fees, exclusions and risk still determine what the fund does. A climate paragraph cannot replace those checks.

What would become harder to compare

Current TCFD product reports require Scope 1, Scope 2 and Scope 3 emissions, total carbon emissions, total carbon footprint and weighted average carbon intensity. They also include contextual information, historic calculations after the first year and, where reasonably practicable, climate value-at-risk and an implied temperature or warming-alignment measure.

These figures have limitations. Portfolio emissions depend on company data, estimates, coverage and methodology. Scenario outputs can imply more precision than the underlying assumptions support. Even so, publishing the measures creates a common evidence trail that researchers, advisers, journalists and prospective clients can inspect without first having a contractual relationship with the manager.

CP26/17 acknowledges that less information may be publicly available. Its judgement is that the proposed regime can still meet institutional needs while reducing a reporting burden that has not served retail readers well. That is the central policy choice, rather than a technical clean-up around the edge of the rulebook.

Institutional clients keep a narrower data right

Institutional clients that need climate information for their own disclosure obligations would retain a regulatory route to obtain it. At a minimum, managers would have to provide Scope 1, 2 and 3 greenhouse gas emissions data when an eligible client asks. The right would apply once per calendar year for each product.

The proposal narrows the mandatory dataset. It does not require the full collection of product-report metrics, but FCA guidance would encourage firms to provide other information where it is reasonably required, feasible and permitted under the contracts governing the data.

The FCA also proposes guidance against supplying figures where data gaps or methodological problems cannot be handled with proxies or assumptions without making the result misleading. This is an important boundary. A right to request data does not make every portfolio number equally complete or comparable.

Pension trustees and other institutional clients would need to specify what they require, when they require it and how it should align with their own reporting boundary. Managers would need systems capable of producing the data even though the full report was no longer public.

The proposal does not remove entity-level TCFD reporting

CP26/17 addresses product-level reporting. The FCA says it will continue exploring possible changes to entity-level rules, but those rules are not part of this consultation.

An entity report explains how an asset manager, life insurer or regulated pension provider considers climate risks and opportunities across the business it manages or administers. Product reporting applies that information to a particular fund, portfolio or service. Removing the second document would not remove the first.

The distinction also keeps this proposal separate from the FCA's CP26/5 consultation on moving listed-company reporting from TCFD-aligned rules towards UK Sustainability Reporting Standards. The TCFD guide explains the wider UK reporting landscape and how International Financial Reporting Standard S2 carries the framework's architecture forward.

The FCA's proposed FRAME fund-reporting system is separate again. FRAME would redesign the supervisory data that managers submit about funds; it would not replace the investor-facing climate or sustainability disclosures described here.

Where SDR labels and climate disclosure meet

The Sustainability Disclosure Requirements (SDR) regime has a different job. It governs sustainability labels, naming, marketing and product disclosures. A fund using a sustainability label must explain its sustainability objective, investment approach and progress. The proposed TCFD changes concern financially material climate risks and emissions information.

A labelled fund could therefore need both forms of communication. Its SDR disclosure explains the sustainability goal and how the manager pursues it. Its climate-risk communication explains how material climate risks or opportunities could affect financial performance. Neither one proves that the fund is suitable for a particular investor or that its holdings are low risk.

CP26/17 would remove the requirement to include a TCFD product report, or a link to one, inside the public product-level sustainability report. Other SDR product reporting would continue. Our guide to FCA sustainability labels explains what the four labels require and what investors still need to check.

What firms should prepare before final rules

The consultation has closed, but the current rules remain in force until the FCA finalises and implements any changes. The regulator has said it aims to do that in autumn 2026.

Firms can use the interval to identify which retail communications already explain material risk and return, decide how climate assessments fit into existing product-governance processes and test whether the resulting language is clear without becoming vague. They also need to preserve a reliable route for institutional data requests.

The cost estimate deserves the same discipline. The FCA expects about 261 asset managers and 34 asset owners, covering around 9,000 products, to save approximately £20 million a year. It derived baseline costs from a voluntary survey of 11 firms and applied assumptions across the wider population. The estimate supports the direction of the proposal, but it is not a measured saving across every affected firm.

For investors and researchers, the practical task is to establish where comparable product data will remain available if the rules change. Fund documents, SDR reports, manager disclosures and direct requests may each hold part of the answer. A shorter retail explanation can be better communication while the public market still becomes harder to compare.

The decision is about format and access

The current system produces climate data that many retail investors do not read. The proposed system tries to make the financial consequence clearer, but gives up a standard public report to do it.

Whether that trade works will depend on two things the final rule cannot settle by wording alone: whether firms explain material climate exposure with enough specificity to inform a decision, and whether emissions data remain accessible enough for the market to compare products and challenge weak claims.

Sources

• Financial Conduct Authority: CP26/17 consultation page
• Financial Conduct Authority: CP26/17 full consultation paper
• Financial Conduct Authority: simpler climate reporting proposals
• Financial Conduct Authority: PS21/24 current TCFD rules
• Financial Conduct Authority: Sustainability Disclosure Requirements regime
• Feature image: financial reporting desk photograph by Jakub Żerdzicki on Unsplash