The Financial Conduct Authority has warned UK consumers do not yet understand how their investments and pensions impact the environment, as it flirted with the idea of imposing a carbon footprint rating system.

It comes as MPs challenged the financial watchdog and the Bank of England on their plans to help consumers navigate financial products from a “sustainability and climate risk perspective”.

In recent letters sent to both Andrew Bailey and Mark Carney, published today (March 10), chairman of the Treasury committee Mel Stride asked whether implementing an environmental rating system on financial products was a viable option to help consumers understand their carbon footprint.

This would be similar to the Energy Performance Certificate rating on a property, which ranks buildings in terms of energy efficiency. Mr Stride said: “Clarity for consumers on the carbon footprint and climate risk of financial products is severely lacking. Both the Bank and the FCA have stressed the need to improve this.

“In the previous parliament, the committee was told that many auto-enrolment pension default funds are subject to a ‘climate lottery’. “The great variance in how well investments are protected from climate risk could leave savers and pension holders out of pocket.”

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