Listed companies required to make climate-related disclosures from January
The FCA has set out how it will enforce new climate disclosure rules for UK listed companies.
The new rules will require all companies listed on the London Stock Exchange to make climate-related disclosures consistent with the approach set out by the Taskforce on Climate-related Financial Disclosures (TCFD) — or explain why not.
The regulator announced the rules in November.
Under these recommendations, companies must disclose their governance around climate related risks and how they aim to identify, assess, and manage them.
The premium listing rules cover all companies in the FTSE 100, FTSE 250 and FTSE Fledgling indices, and will be applied from 1 January 2021. This means the first annual financial reports required to include the statement be published in spring 2022.
The FCA said the guidance and rules would help market participants manage the risks inherent in moving to a low carbon economy, while also capturing opportunities to benefit consumers.
It added that encouraging issuers to make more comprehensive and high-quality climate-related financial disclosures would enhance market integrity, fill product gaps and support more effective competition between financial services firms.
The regulator believes the disclosures will also help investors and other market participants allocate capital more effectively and ensure that the cost of this capital better reflects how well companies are managing climate-related risks and opportunities.
The FCA said: “Ultimately, we should expect financial flows better to support the transition to net-zero carbon emissions, through which policymakers hope to address climate change.”
The regulator expects companies to be able to comply, although it understands that some may need more time to deal with data, analytical or modelling challenges.
It will consult in the first half of 2021 on extending the scope of these rules and also on introducing TCFD obligations for asset managers, life insurers and pension providers.
Further information on its supervisory approach to the new listing rule will appear in a Primary Market Bulletin in late 2021, it said.
The UK government intends to make TCFD-aligned disclosures mandatory across the economy by 2025, with a significant portion of mandatory requirements in place by 2023.
The TCFD, which was established by the Financial Stability Board, said in its latest status report that more than 1,500 organisations had expressed their support for the TCFD recommendations, representing an increase of over 85% since 2019. Minerva is an accredited TCFD supporter and our Sustainability Governance Research Framework is fully aligned with TCFD guidelines offering clients a fully integrated TCFD research and voting solution for global securities.
To find out how Minerva can support your informed climate-related stewardship, call us on +44 (0)1376 503500 or email us at hello@minerva.info
Last Updated: 21 December 2020