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The FCA is proposing a disclosure regime for asset managers, life insurers, and pension providers.

By Paul Davies, Nicola Higgs, Victoria Sander, David Berman, Anne Mainwaring, and Charlotte Collins

On 22 June 2021, the FCA published a Consultation Paper (CP21/17) on introducing climate-related financial disclosure rules and guidance for asset managers, life insurers, and FCA-regulated pension providers. The disclosure requirements would be consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The FCA plans to introduce the disclosure requirements in a new ESG Sourcebook in the FCA Handbook. The regulator anticipates that this Sourcebook will expand over time to include new rules and guidance on other climate-related topics and wider ESG considerations.

The FCA is consulting on extending its rules to standard listed issuers.

By Paul A. Davies, Chris Horton, James Inness, Anna Ngo, and Charlotte Collins

On 22 June 2021, the FCA published a Consultation Paper (CP21/18) on extending the application of the existing climate-related disclosure requirements for commercial companies with a UK premium listing to a wider scope of listed issuers, so that all commercial companies that issue listed equity shares would be captured by the requirements. The FCA had previously announced that it was going to consult on this extension, so standard listed issuers were forewarned. The FCA plans to apply the requirements for accounting periods beginning on or after 1 January 2022.

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.

The annual report shows a considerable uptake in the adoption of climate-centred financial disclosures.

By Paul A. Davies and Michael D. Green

The Task Force on Climate-related Financial Disclosures (TCFD) published its Annual Report on TCFD-aligned disclosures by firms (Annual Report), on 29 October 2020. The TCFD was established by the Financial Stability Board (FSB) in 2015 as a mechanism to develop an approach for companies to disclose climate change matters. The TCFD offers companies guidelines and disclosure recommendations for providing information to investors, so that companies can provide more consistent, comparable data. The TCFD also promotes climate-related scenario analysis and the integration of climate-related risks into risk-management processes.

The FRC prompts boards, companies, and auditors to improve responses to climate change challenges through improved governance structure and narrative reporting.

By Paul A. Davies and Michael D. Green

On 10 November 2020, the Financial Reporting Council (FRC) published its findings (the Report) on its thematic review undertaken in 2020, concerning climate-related considerations that various stakeholders take into account. The Report focuses on boards, companies, auditors, professional bodies, and investors, as these actors help drive appropriate reporting to the market and thus ‘play important roles in delivering society’s climate ambitions’.