On 21 December, the FCA published a Policy Statement, final rule and guidance promoting better climate-related financial disclosures for UK premium listed commercial companies.
The FCA has introduced a new rule in Listing Rule (LR) 9.8 requiring that commercial companies with a UK premium listing (including sovereign-controlled commercial companies) include a statement in their annual financial report setting out:
- whether they have made disclosures consistent with the Taskforce on Climate related Financial Disclosure’s (TCFD) recommendations and recommended disclosures in their annual financial report;
- where they have not made disclosures consistent with some or all of the TCFD’s recommendations and/or recommended disclosures, an explanation of why, and a description of any steps they are taking or plan to take to be able to make consistent disclosures in the future – including relevant timeframes for being able to make those disclosures;
- where they have included some, or all, of their disclosures in a document other than their annual financial report, an explanation of why; and
- where in their annual financial report (or other relevant document) the various disclosures can be found.
The rule is accompanied by guidance to help listed companies determine whether their disclosures are consistent with the TCFD’s recommendations and recommended disclosures. The guidance will also clarify the limited circumstances in which we would expect in-scope companies to explain rather than disclose. The rule will apply for accounting periods beginning on or after 1 January 2021, meaning the first annual financial reports subject to the rule would then be published in spring 2022. As at 7 December 2020, the rule will apply to 460 companies on the FCA Official List.
The Policy Statement also contains a Technical Note clarifying existing disclosure obligations for a wider scope of issuers in EU legislation and its Handbook – issuers may, in the FCA’s view, already be required to make disclosures on climate-related and other ESG matters under particular provisions of the LR, Disclosure Guidance and Transparency Rules (DTR), Market Abuse Regulation and the Prospectus Regulation, in certain circumstances. The FCA aims to publish further consultation papers to extend the application of TCFD disclosures in early 2021.
