Impact Policy Tracker Policy

PS21/24: Enhancing climate-related disclosures by asset managers, life insurers and FCA-regulated pension providers



PS21/24 mandates that asset managers, life insurers, and FCA-regulated pension providers disclose climate-related risks and opportunities in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. These disclosures must be made annually at both the entity and product levels, covering governance, strategy, risk management, and metrics related to climate change. The regulation aims to enhance transparency, enabling clients and consumers to make informed investment decisions and directing capital towards sustainable activities.

Highlights

  • Part of the UK’s Government Broader Efforts Towards Mandatory Climate-Related Disclosures: PS21/24 is part of the UK government’s wider strategy to implement mandatory TCFD-aligned disclosures across the economy by 2025. It aligns with the UK’s Roadmap Towards Mandatory Climate-Related Disclosures, which outlines a phased and coordinated approach to ensure that consistent, decision-useful information on climate risks and opportunities is available across the investment chain - from real-economy companies to financial institutions and end-investors. The roadmap underscores that voluntary disclosure is no longer sufficient given the urgency of the climate crisis, and calls for mandatory reporting requirements across seven categories of organisations, including asset managers, insurers, and pension schemes.

  • Complemented by the UK Stewardship Code (2020): PS21/24 and the UK Stewardship Code 2020 operate in a complementary manner to reinforce the integration of ESG and climate considerations into investment practices. While PS21/24 requires TCFD-aligned disclosures for asset managers, insurers, and pension providers, the Stewardship Code provides a voluntary “apply and explain” framework that promotes active ownership, engagement, and long-term value creation. Together, they form a coherent policy mix: mandatory disclosure standards under PS21/24 ensure data transparency, while the Stewardship Code drives investor behaviour and dialogue with investee companies on ESG issues.

Government’s Role:
Market Regulator


Country:
United Kingdom

Policy Type:
Clarifying Investors’ Fiduciary Duties

Year: 2021

Responsible Institution:
Financial Conduct Authority (FCA)

Clarifying Investors’ Fiduciary Duties

What Can Governments Do to Clarify Investors’ Duties to Integrate Sustainability Considerations?

Fiduciary duty refers to the obligation of investors to act in the best interests of their beneficiaries, traditionally understood through the principles of loyalty and prudence. In recent years, the interpretation of this duty has evolved to reflect the growing recognition that Environmental, Social, and Governance (ESG) factorscan pose material risks and opportunities to long-term value creation. As a result, integrating financially material ESG considerations into investment decision-making is increasingly seen not as optional, but as a core component of fiduciary responsibility.

Under this expanded interpretation, fiduciaries are expected to integrate financially material ESG considerations into their investment decisions, engage in active ownership by promoting high ESG standards in their investee entities, and bolster the financial system’s stability and resilience. They must also disclose their investment approach, detailing how they incorporate beneficiaries’ preferences and assess the associated risks and opportunities.

In this context, governments have a critical role to play, since the definition of investors’ duties has profound implications across the entire investment chain. Through regulatory frameworks, governments can clarify that fiduciary duty encompasses the consideration of climate and social-related risks, and establish mandatory disclosure requirements to ensure consistent and transparent ESG practices across the financial sector. While voluntary or 'comply or explain' approaches represent progress, systemic change requires moving towards legally binding obligations. This means not only enabling investors to pursue sustainability objectives without conflicting with their fiduciary responsibilities, but also actively requiring them to do so in order to support a more resilient and accountable financial system.

For more information on the modern concept of fiduciary duty -and how the integration of ESG factors has been clarified or mandated in different countries- visit A Legal Framework for Impact (2021) and PRI’s report Fiduciary Duty in the 21st Century (2019)