Climate-related resources

Climate change continues to be an area of specific focus for in­vestors, reg­u­lat­ors and other busi­ness stake­hold­ers who are increasingly de­mand­ing better dis­clos­ures on climate change matters and chal­len­ging com­pan­ies who are not factor­ing the effects of climate change into their crit­ical ac­count­ing judge­ments. Investors want:

  • to see how the impacts of climate change have been reflected in the measurement and recognition of assets and liabilities;
  • more transparency on the assumptions used and sensitivities to those assumptions; and
  • to be confident that there is consistency between climate-related information included in the narrative in the front end of the annual report and the numbers disclosed in the financial statements.

Investors have also set out their expectations for Paris-aligned accounts - accounts that adequately reflect the impact of getting to net zero emissions by 2050 for assets, liabilities, profits and losses. 

Regulators and standard- setters are responding

For periods commencing on or after 1 January 2021, premium-listed commercial companies are required to include a statement in their annual financial report which sets out whether their disclosures are consistent with the Task Force on Climate-related Financial Disclosure (TCFD) recommendations, and to explain if they are not.  The FCA is extending these requirements to standard-listed companies, asset managers, life insurers and FCA-regulated pension providers for periods commencing on or after 1 January 2022.  The scope of businesses required to report in accordance with the TCFD recommendations is expected to increase even further across the UK economy by 2025, with the majority of requirements in place by 2023.

The IFRS Foundation has established an International Sustainability Standards Board (ISSB) to develop and issue global sustainability standards. The intention is for the first standard to be on climate-related reporting, which is expected to be published in 2022.  The ISSB will play the same role for sustainability reporting as the International Accounting Standard Board (IASB) does for financial reporting.  Through the Technical Readiness Working Group, the IFRS Foundation has undertaken preparatory work to refine the prototype disclosure standard developed by the leading sustainability standard-setters and frameworks built on the TCFD's recommendations.  The UK government has stated that it intends to require UK businesses to report against the standards developed by the ISSB and that it will create a mechanism to adopt and endorse standards issued by the ISSB for use in the UK. These will form part of the UK government’s Sustainability Disclosure Requirements.

In 2020, the IFRS Foundation published educational material to highlight how existing requirements in IFRS Standards require companies to consider climate-related matters when their effect is material to the financial statements.

In the same year, the Financial Reporting Council (FRC) published a thematic review of climate-related considerations by boards, companies, auditors and professional bodies and investors. This highlighted that corporate reporting needs to improve to meet the expectations of investors and other users on the urgent issue of climate change. The FRC's Annual Review of Corporate Reporting emphasises that the FRC will continue to focus on the disclosure of climate-related risks within annual reports as new disclosure requirements beckon.

The European Securities and Markets Authority (ESMA) has also announced that it will focus on disclosure of risks related to climate change as part of its Common Enforcement Priorities for 2021 financial statements. 

This UK Accounting plus page in­cludes our climate-related re­sources to assist com­pan­ies.  It includes links to:

Related resources

FRC and FCA publish reports on TCFD compliance by premium-listed companies

03 Aug 2022

The Financial Reporting Council (FRC) and the Financial Conduct Authority (FCA) have each published reports assessing the quality of Task Force on Climate-related Financial Disclosures (TCFD) by premium-listed companies which were required for periods commencing on or after 1 January 2021. The FRC also reviewed the extent of climate-related disclosures within the financial statements and provides better practice disclosures which it encourages companies to refer to when preparing or seeking to improve their own disclosures.

Accounting roundup — July 2022

27 Jul 2022

This Accounting roundup, covering the period April 2022 through to June 2022, pulls together the headlines for all the latest developments in accounting, providing links to a wealth of further information and resources.

Deloitte comment letter on the Transition Plan Taskforce’s call for evidence on proposals for a sector-neutral framework for private sector transition plans

21 Jul 2022

We have responded to the Transition Plan Taskforce’s (TPT's) call for evidence on proposals for a sector-neutral framework for private sector transition plans.

New FCA Policy Statement and Listing Rule promoting better climate-related financial disclosures aligned with TCFD

14 Jul 2022

The Financial Conduct Authority (FCA) have published a Policy Statement and Listing Rules requiring listed entities to provide Task Force on Climate-related Financial Disclosure (TCFD) aligned disclosures.

FSB progress report on addressing climate-related financial risks

14 Jul 2022

The Financial Stability Board (FSB) has submitted to the G20 Finance Ministers and Central Bank Governors its first annual progress report on the July 2021 roadmap to address climate-related financial risks.

FRC publishes updated Guidance on the Strategic Report

22 Jun 2022

The Financial Reporting Council (FRC) has published an updated edition of its Guidance on the Strategic Report to incorporate the new climate-related financial disclosures, following changes in legislation made earlier this year, along with a number of other amendments which have been made to maintain alignment with legislation.

FRC Stakeholder Survey — ISSB Exposure Drafts

26 May 2022

The Financial Reporting Council (FRC) invites stakeholders to share their views on the Exposure Drafts recently published by the newly formed International Sustainability Standards Board (ISSB).

Lab calls for participants for a new net zero disclosures project

05 May 2022

The Financial Reporting Lab is calling for participants to participate in a new project looking at how net zero commitments are reported by companies and used by investors.

Finance for the Future Awards – now in their 10th year – open for entries

08 Apr 2022

The Finance for the Future Awards 2022 are now open for entries to all organisations, globally, whether listed, small, charities, a social enterprise or public sector, and to individuals who drive change in this area.

The new FCA compliance statement on TCFD disclosures-Observations from first reporters

08 Apr 2022

This publication presents the results of our survey into how the first wave of December 2021 year-end reporters have approached the new TCFD reporting requirements.

European Commission adopts proposal for a Directive on corporate sustainability due diligence

01 Mar 2022

The European Commission has adopted a proposal (and associated annex) for a Directive on corporate sustainability due diligence.

UK government issues non-binding guidance on climate-related financial disclosures

23 Feb 2022

The Department for Business, Energy & Industrial Strategy (BEIS) has issued non-binding guidance on legislation requiring certain UK companies and LLPs to make climate-related financial disclosures.

FRC publishes guidance on auditor climate-related reporting responsibilities

17 Feb 2022

The Financial Reporting Council (FRC) has published a new FRC Staff Guidance, 'Auditor responsibilities under ISA (UK) 720 in respect of climate related reporting by companies required by the Financial Conduct Authority'.

FRC outlines its preliminary thoughts on sustainability standards

11 Feb 2022

The Financial Reporting Council (FRC) has outlined its preliminary thoughts to the International Sustainability Standards Board (ISSB) on the prototypes published by the Technical Readiness Working Group to support the development of International Sustainability Standards.

Need to know — UK government finalises legislation on climate-related financial disclosures

03 Feb 2022

This Need to know discusses regulations approved by the UK government in January 2022, which introduce new climate-related financial disclosures for certain UK companies and Limited Liability Partnerships (LLPs).

UK government finalises legislation on climate-related financial disclosures

20 Jan 2022

The Department for Business, Energy & Industrial Strategy (BEIS) has finalised two statutory instruments requiring certain UK companies and LLPs to make climate-related financial disclosures.

PRAG publishes guidance on TCFD disclosures for occupational pension schemes

13 Jan 2022

The Pensions Research Accountants Group (PRAG) has published guidance to help practitioners understand the Taskforce on Climate-related Financial Disclosures (“TCFD”) governance and reporting requirements that have been introduced for certain pension schemes from 1 October 2021.

FCA confirms final rules and guidance for climate-related financial disclosures for listed companies and certain regulated firms

19 Dec 2021

The Financial Conduct Authority (FCA) has published new climate-related disclosure rules for listed companies and certain regulated firms.

Accounting roundup — Closing Out 2021

16 Dec 2021

Closing Out 2021 discusses the principal corporate reporting issues arising in respect of 31 December 2021 annual reports, covering areas of regulatory focus identified in the FRC’s Annual Review of Corporate Reporting 2020/2021, issues arising from climate change including new and forthcoming climate-related disclosures and developments in reporting standards.

TRWG provides recommendations to the ISSB

14 Dec 2021

The IFRS Foundation has made available a webcast that provides the Technical Readiness Working Group’s (TRWG) recommendations to the International Sustainability Standards Board (ISSB).

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.