UK scraps climate change reporting rules for the City

The City watchdog has abandoned plans to force companies to tell investors about climate change risks they face. The Financial Conduct Authority (FCA) watered down proposals for a new set of climate reporting standards for companies listed on the stock market on Wednesday amid concerns that they could hurt the UK’s competitiveness. The plans would have required companies to warn investors about a series of potential risks from global warming .

Instead, they can issue climate reports under existing “comply or explain” guidelines, rather than making them mandatory. The shift in the City comes amid a global retreat from climate rules across financial hubs after Donald Trump’s election to the White House. Under the Trump administration, the US Securities and Exchange Commission has scrapped a series of “burdensome” climate reporting rules from company reports on Wall Street. Several US states have also passed rules banning public investment in environmental, social and governance funds.

The EU also watered down some of its proposed climate reporting rules last year after a business backlash. An FCA review found that 92pc of FTSE 350 companies already disclosed their climate risks under current rules, which require companies to meet a global reporting standard or explicitly explain why they have not. Respondents to the FCA’s consultation had warned compulsory reporting rules “could place disproportionate burdens” on smaller businesses.

Jon Relleen, at the FCA, said: “Good information builds strong markets. “By aligning with international standards and taking a proportionate approach to implementation, we’re supporting transparency for investors and the UK’s leading position as a place to invest and raise capital.” Alicia Kedzierski, the head of sustainable finance at the FCA, said the rules would retain “flexibility for issuers, particularly those at an earlier stage of their lifecycle”.

The decision to back away from mandatory climate reporting rules comes despite a summer of record temperatures and droughts . Luke Hildyard, of the shareholder-activism group ShareAction, said: “This summer’s heatwaves show that climate change is already reshaping our economy. “Few companies will escape material climate risk, and they must report on it.”