New rule will require listed companies to state whether they have made disclosures in accordance with the TCFD.

By Paul A. Davies, Nicola Higgs, Chris Horton, and Michael D. Green

On 21 December 2020, the Financial Conduct Authority (FCA) confirmed in a published Policy Statement[1] (the Statement) that it will introduce a new Listing Rule (the Rule) requiring premium listed companies to state whether they have made disclosures pursuant to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, and if not, why.

The Rule comes in response to the FCA’s March 2020 Consultation Paper, under which the FCA sought to enhance climate-related disclosures by listed issuers and to clarify existing disclosure obligations. The Rule is a forerunner to the UK’s plan to fully align corporate disclosure with the TCFD by 2025. The Statement sets out that “better disclosure about organisations’ exposure to climate change risks and opportunities will lead to more informed pricing and drive investment towards greener projects and activities”, helping support net zero emissions ambitions. The FCA is hopeful that the implementation of TCFD-aligned disclosures will pave the way for an eventual international standard for corporate reporting that is also integrated with financial reporting.