Climate-related financial disclosures: New rules for standard listed issuers

Climate-related financial disclosures: New rules for standard listed issuers

Overview

On 17 December 2021, the FCA published two policy statements confirming final rules and guidance to promote improved climate-related financial disclosures. Such measures are aimed at helping to inform market pricing and support business decision-making, with the ultimate goal of assisting consumers in making more informed investment decisions.

Under Policy Statement 21/23, issuers of standard listed shares or equity shares represented by certificates (global depositary receipts), must now include a statement in their annual financial reports explaining whether their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures ("TCFD"). If not, they will need to explain why. (Standard listed investment entities and shell companies, however, are excluded from this requirement). This new Listing Rule and associated guidance is intended to reflect the existing obligation under the Listing Rules (LR 9.8.6 R (8)) for premium listed companies in relation to climate-related disclosures, so that standard listed issuers will now be subject to the same obligations in this regard.

The new Listing Rule is accompanied by further guidance to help companies determine whether their disclosures are compliant with the TCFD Recommendations and related disclosures. This guidance incorporates references to the TCFD's updated guidance on metrics, targets and transition plans and updated implementation guidance published in October 2021 (which can be found here).

The FCA's latest policy statement 21/24 also included further information on climate-related disclosures by asset managers, life insurers and pension providers. This policy statement and related rules will be addressed in more detail in Travers Smith's Financial Services & Market's New Year Briefing, to be published early next month. 

The new rules will apply for accounting periods beginning on or after 1 January 2022.

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