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Largest listed companies to align UK climate reporting with TCFD rules from 2021

Published November 18, 2020

Largest listed companies to align UK climate reporting with TCFD rules from 2021

The UK government is to introduce new climate change reporting rules requiring the most prominent listed companies to make better disclosures about how climate change affects their business.  

The rules would be consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). 

Speaking at the Green Horizon Summit, the Chancellor of the Exchequer, Rishi Sunak, announced the government will introduce a Listing Rule for reporting periods beginning 1 January next year. Many of the remaining disclosures will become mandatory by 2023. 

A full Policy Statement and final rules will follow by the end of the year.  

The upcoming rules and regulations will capture a significant portion of the economy including listed commercial companies, UK-registered large private companies, banks, building societies, insurance companies, UK-authorised asset managers, life insurers, FCA-regulated pension schemes, and occupational pension schemes. 

In a speech to the same conference, the CEO of the FCA, Nikhil Rathi, said the organisation was “promoting good disclosures across the investment chain…the new rule will cover two-thirds of the market capitalisation of equities on the UK Official List – that’s 1.9 trillion pounds.” 

Initially, the FCA will give some leeway to any companies which cannot comply immediately, although an explanation will be required.  

After that, proposals will be introduced in the first half of 2021 to extend the rule to a wider scope of listed issuers. The rule may also be tightened, moving from ‘comply or explain’ to mandatory disclosure. 

The proposed TCFD implementation measures for asset managers, life insurers and FCA-regulated pension providers will apply to the largest firms by 2022.  

Interim Report of the TCFD Taskforce https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/933782/FINAL_TCFD_REPORT.pdf