Progress bar

Update on the UK ESG Sourcebook

Insight 12 May 2022

Update on the UK ESG Sourcebook

Earlier this year, the Financial Conduct Authority (FCA) released its ESG Sourcebook (the “Sourcebook”), after issuing Policy Statement PS21/24 in December 2021. The rules, which became effective on 1 January 2022, are set to apply to asset managers such as AIFMs or UCITS management companies, as well as asset owners. The first set of reports will be due by 30 June 2023 and focus on both entity and product level disclosures.

Who does it apply to?

  • Any firm providing “portfolio management” activities under MiFID
  • UK UCITS management companies
  • Full-scope UK AIFMs
  • Small-authorised UK AIFMs
  • ICVCs that are UCITS schemes without a separate management company
  • Insurers or pure reinsurers
  • Other asset owners

A firm is exempt from the disclosure requirements if and for as long as the assets under administration or management (relating to TCFD in scope activities) amount to less than £5bn over a 3-year rolling average, assessed annually.

Unlike the SFDR in the EU, this the UK ESG Sourcebook does not apply to non-UK entities marketing in the UK. However, both regulations have kept the same reporting deadlines which will help managers organise themselves.

What are the types of disclosures?

Two levels of disclosures are included: Entity and Product.




Annual TCFD report to be issued on the Asset Manager/Owner’s website by 30 June 2023 and every subsequent year.

Contents of a TCFD entity report

  • Strategy: Explain where an investment strategy, asset class or product is materially different to its overall entity level approach to governance, strategy or risk management under the TCFD Recommendations and Recommended Disclosures[1] (the “TCFD Recommendations”).
  • Decision making: Explain how the firm’s strategy has influenced the decision-making and process by which it delegates functions, selects delegates, and relies on services, strategies or products offered or employed by third parties.
  • Climate-related scenario analysis: Explain how the firm applies climate-related scenario analysis in its investment and risk decision making process.
  • Targets and KPIs: Description of any targets[2] set to manage climate-related risks and opportunities, as well as KPIs used to measure progress.

Approach to relevant climate-related financial disclosures contained in other reports at an entity-level

  • Firm is a member of a group: reliance on group disclosures consistent with the TCFD Recommendations is allowed, so as long as those are relevant to the firm and cover the assets administered as part of its TCFD in-scope business. The firm will need to ensure that its TCFD report:
  • Includes cross-references to any climate related financial disclosure contained within the group report in relation to its TCFD in-scope business; and
  • Sets out the rationale for relying on the disclosure made by its group and why the disclosure is relevant to the assets managed.
  • Any material deviations between its disclosures and the TCFD Recommendations must be clearly explained
  • Investors in unauthorised AIFs: UK AIFMs may provide climate disclosures in a supplementary document to their investors, so as long as the rationale for doing so is explained in the TCFD entity report.

Compliance statement

  • Statement, signed by a member of senior management of the firm, confirming that the disclosures in the report, including any third party or group disclosures cross-referenced in it, comply with the Sourcebook requirements.


Content of TCFD product reports[3]

  • Historical and current metrics (e.g. Scope 1, 2 and 3 greenhouse gas emissions, carbon footprint or climate value-at-risk)
  • Additional disclosures will apply to TCFD products that have concentrated or high exposures to carbon intensive sectors.
  • Full scope UK AIFMs/Small authorised UK AIFMs managing unlisted and unauthorised AIFs, as well as investment firms performing “portfolio management” activities under MiFID are not required to publicly disclose their product reports.
  • UK AIFMs managing unauthorised AIFs listed on a recognised investment exchange will be required to include their public TCFD product reports[4] in their TCFD entity reports.
  • Investors will also have the opportunity, no earlier than 1 July 2023, to request on-demand products reports.

Application timeline

Firms with over £50Bn in AuM (for Asset Managers) or £25Bn (for Asset Owners)

Other firms with over £5Bn in AuM

How Sanne can help

Sanne is a leading provider of alternative asset and corporate administration services. ESG services and expertise is delivered across hedge, private equity, private debt, capital markets, real assets, and corporate services. Our clients range from investing in ESG-compliant projects to launching Focus Funds or Impact Funds.

Sanne provides ESG reporting services and independent verification of ESG reporting and compliance, via our sophisticated cloud-based platform. We provide our clients and their investors with expert data analysis, governance, and education tools


[2] Explain why, if applicable, it does not have KPIs.

[3] Using the TCFD Annex and having regard to the TCFD Guidance on Metrics, Targets, and Transition Plans

[4] or an adequately contextualised and prominent cross-reference and hyperlink to this report

To discuss how Sanne can assist you or your business, reach out to Karlien and Paul directly.

Let's talk...

ESG Services
Background image
Karlien De Bruin Global Head of ESG - South Africa
Card link - Go to a specific page
Background image
Paul Séjournant Director, Product Development - United Kingdom
Card link - Go to a specific page
Swiper Scrollbar

Other insights from Paul Séjournant

Insight 4 August 2022
Bringing new insights to regulatory compliance: Private Funds CFO feature
Card link - Go to a specific page
Insight 2 August 2022
Q2 2022 regulatory update
Card link - Go to a specific page
Insight 29 July 2022
Update on the Trust Registration Service
Card link - Go to a specific page