The Financial Conduct Authority (FCA) has published a Policy Statement (PS21/23) and final rules and guidance in relation to climate-related financial disclosures for standard listed companies. It has also updated its guidance on climate-related disclosures for premium and standard listed companies.
1. Rules for standard listed companies
Under new Listing Rule 14.3.27R, standard listed companies are required to include a statement in their annual financial report which sets out whether their disclosures are consistent with the Recommendations and Recommended Disclosures published by the Task Force on Climate-Related Financial Disclosures (TCFD) and to explain why if they are not. The new rule applies for accounting periods beginning on or after 1 January 2022.
The FCA has made no material changes to the rules consulted upon in June (CP21/18 – see our blog post here). The rules for standard listed companies mirror those that already apply to premium listed companies under LR 9.8.6R(8) see our updated briefing for listed companies below:
The new rules also apply to standard listed issuers of global depositary receipts and shares other than equity shares but do not apply to standard listed investment entities and shell companies.
Guidance for premium and standard listed companies
The FCA has also updated its guidance provisions contained in LR 9 for premium listed companies and LR 14 for standard listed companies. The updates are to reflect the TCFD’s most recent guidance on metrics, targets and transition plans and implementing the TCFD Recommendations (see our blog post here). Under the FCA’s revised guidance:
- where a standard or premium listed company makes disclosures on transition plans as part of its strategy-related TCFD disclosures, and the company is headquartered or operates in a country that has made a commitment to a net-zero economy (such as the UK’s commitment under the Climate Change Act 2009 (Order 2019)), the company is encouraged to assess the extent to which it has considered that commitment in developing and disclosing its transition plan; and
- standard and premium listed companies are encouraged to consider the Sustainability Accounting Standards Board metrics for their sector when making their TCFD-aligned disclosures.
The FCA has also updated its Technical Note on Disclosures in relation to ESG matters, including climate change (TN/801) to reflect these developments.
2. Proposed rules for UK-incorporated large companies
The UK Government is consulting on draft regulations that will amend the Companies Act 2006 to require UK-incorporated large companies to include TCFD climate-related disclosures in their strategic reports. This new requirement will be in addition to the Listing Rule requirements. Our briefing on these proposals is available below: