The FCA’s proposal to remove TCFD-based climate reporting requirements for investment products might seem like a niche ESG story. In reality, it highlights a much broader challenge facing compliance teams across financial services.
What happens when reporting becomes an end in itself?
The FCA’s consultation proposes removing requirements for product-level sustainability disclosures that were originally introduced under the Sustainability Disclosure Requirements (SDR) regime. The regulator’s rationale is straightforward: the disclosures are complex, costly to produce and appear to have limited value for many retail investors. Whether you agree with the proposal or not, it reflects an important regulatory reality. More reporting does not automatically lead to better outcomes.
For years, firms have operated in an environment where the safest response to regulatory expectations was often to produce more documentation, more attestations, more disclosures and more evidence. The assumption was that more information meant greater transparency and better decision-making. But in practice, the opposite can sometimes occur. Lengthy reports are rarely read in full. Important information becomes buried beneath less important information. Teams spend increasing amounts of time producing documents and decreasing amounts of time considering whether those documents are actually helping anyone make better decisions.
The FCA’s consultation is notable because it implicitly acknowledges this problem. The question is no longer simply whether information can be disclosed. It is whether the disclosure is useful. That same question should be asked throughout compliance functions.
How many attestations are completed because they genuinely support accountability, and how many are completed because they have always been there?
How many gifts and hospitality entries are ever reviewed?
How many policy acknowledgements are collected without any meaningful assessment of understanding?
How many registers exist primarily to demonstrate that a process took place rather than to manage a risk?
These are uncomfortable questions because they challenge familiar practices. Yet they sit at the heart of effective compliance.
Information that matters
Good governance is not measured by the volume of records created. It is measured by whether controls achieve their intended purpose. None of this suggests that record-keeping is unimportant. Documentation remains essential and regulators still expect firms to evidence decisions, monitor risks and demonstrate compliance. The challenge is ensuring that information serves a purpose beyond satisfying a process.
The most effective compliance programmes are not necessarily those that collect the most data. They are the ones that generate information people can actually use.
The FCA’s climate reporting rethink may ultimately be remembered as a sustainability policy change. It may also be remembered as something more significant: a reminder that transparency is not about producing more information. It is about producing the right information.
That principle sits at the heart of effective compliance. Whether managing personal account dealing, gifts and hospitality, conflicts of interest or employee attestations, firms need systems that help them identify risk, evidence decisions and focus attention where it matters most. The goal is not to create more records, it is to generate information that people can actually use.