The Financial Conduct Authority (FCA) claims investment firms could save around £20m a year under its proposals to simplify climate reporting for investment products.

This is based on analysis by the FCA from feedback from firms on reporting costs.

The UK’s financial watchdog says these savings can be achieved by replacing the detailed product-level reports based on the Task Force on Climate-related Financial Disclosures (TCFD), which was introduced five years ago, with “simpler, more targeted information for retail investments” in line with consumer rules.

“These proposals will make it easier for firms to communicate with their customers in ways that genuinely inform and engage them,” said FCA director of wholesale buy-side Michelle Beck.

The plans to simplify reporting follow the FCA’s review of climate reporting by asset managers, life insurers and pension providers.

This found that “while the rules have improved firms’ awareness of climate risks, product-level reports are often seen as too complex by investors and not widely used”.

The proposals are part of wider work by the FCA to streamline sustainability reporting requirements. This includes ensuring that retail investors receive relevant information on how material climate risks could affect a product’s financial performance.

Also, institutional clients would be able to request key emissions data from firms, but this would no longer need to be published in full reports under the FCA’s plans.

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