Since 2021, premium-listed commercial companies have been required by the Listing Rules (LR 9.8.6R(8)) to make climate-related financial disclosures consistent with the recommendations and recommended disclosures of the Task Force on Climate-related Financial Disclosures (TCFD), on a ‘comply or explain’ basis. This requirement was extended via LR 14.3.27R to companies with a standard listing of shares or Global Depositary Receipts (GDRs) representing equity shares, for periods beginning on or after 1 January 2022.

Companies in scope of the Listing Rules must include a clearly identifiable statement in their annual report setting out whether they have made disclosures consistent with the TCFD’s recommendations and recommended disclosures. Where those disclosures are included in a document other than the annual report, the statement must identify which disclosures are located elsewhere and explain why. If companies have not made disclosures consistent with all relevant TCFD’s recommendations and recommended disclosures in either the annual report or another document, they must disclose this fact, explain the reasons, and outline any steps being taken to ensure the disclosures are made in future periods, and the expected timeline for doing so.

Transparent reporting of the effects of climate change within the annual report and accounts is a key area of regulatory focus of the Financial Reporting Council (FRC) and Financial Conduct Authority (FCA) who have both undertaken thematic reviews setting out their disclosure expectations in this area.  Further information is included in the FRC’s thematic reviews TCFD disclosures and climate in the financial statements and TCFD – metrics and targets and in the FCA’s Review of TCFD-aligned disclosures by premium listed commercial companies.  An FRC Lab report provides key messages for those companies making net zero commitments with a number of key messages reiterated within the FRC's Annual Review of Corporate Reporting 2022/23.

The European Securities and Markets Authority (ESMA) has also announced that it will focus on climate-related matters as part of its Common Enforcement Priorities for 2023 financial statements.

Whilst climate reporting is improving, the expectations of regulators and investors are increasing.  Regulators will be looking for continued improvement in 2023 and the FRC has indicated that this coming reporting season, as reporting becomes more established, the it is likely to enter into substantive correspondence with companies where their disclosures do not meet its expectations. 

Many companies in the scope of TCFD disclosures under the Listing Rules will also be in scope of the Climate-related Financial Disclosure Regulations (CFD) and therefore need to ensure that their disclosures comply with those requirements as well.

This page includes a collection of our news items on the TCFD listing rule and reporting expectations.