On 9 November 2020, Chancellor Rishi Sunak announced plans to mandate climate disclosures by large companies and financial institutions by 2025.
This would make the UK the first G20 country to do so. This statement furthered the proposals within the Green Finance Strategy published in July 2019, in which the Government set out its expectation that by 2022, all listed companies and large asset owners would disclose in line with the Task Force for Climate-related Financial Disclosures (TCFD) recommendations.
The Government has now launched a consultation, seeking views on proposals to require mandatory TCFD-aligned climate-related financial disclosures from publicly quoted companies, large private companies and Limited Liability Partnerships (LLPs). The Government’s proposals are aligned with the TCFG’s 2017 recommendations on disclosure, which are structured around four overarching pillars: Governance, Strategy, Risk Management and Metrics & Targets.
The key proposals are as follows:
- ‘Companies will be required to report climate-related financial information in the non-financial information statement which forms part of the Strategic Report.’
- ‘LLPs will be required to report climate-related financial information in either the non-financial information statement which forms part of their Strategic Report or the Energy and Carbon Report which forms part of their Annual Report.’
The Government intends for regulations to be made by the end of 2021, coming into force from 6 April 2022, and to be applicable for accounting periods starting on or after that date. The proposals reaffirm the increasing impact of the climate emergency on corporate governance within the UK which may trickle down to small companies in the future.
A link to the consultation can be found here.
The consultation will close at 11.45pm on 5 May 2021.
