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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

Need to know-UK Government publishes Greening Finance: A Roadmap to Sustainable Investing

06 Dec 2021

This Need to know discusses the UK Government’s Roadmap to Sustainable Investing, published in October 2021.

Governance in focus — On the board agenda 2022

03 Dec 2021

As 2021 draws to a close, our annual review of board topics will stimulate your thinking and help prepare you for the year ahead. Across the board, expectations of business are rising and it is this demanding environment which shapes the articles in this year’s publication.

FRC Lab publishes its third newsletter for 2021

23 Nov 2021

The Financial Reporting Lab of the Financial Reporting Council (FRC) has published its third newsletter for 2021 providing highlights of its activities.

FCA emphasises importance of compliance with new TCFD Listing Rule

18 Nov 2021

The Financial Conduct Authority (FCA) has published Primary Market Bulletin 36 which focuses on the new Listing Rule (LR 9.8.6R(8)) requiring premium-listed companies to include a statement in the annual report confirming the extent to which they have made disclosures consistent with the Task Force on Climate-related Financial Disclosure (TCFD) Recommendations. This new rule comes into force for accounting periods beginning on or after 1 January 2021 with the first annual reports including those disclosures being published from January 2022.

FRC publishes a staff factsheet on climate-related matters for FRS 102 reporters

16 Nov 2021

The Financial Reporting Council (FRC) has published a staff factsheet to inform preparers of annual reports under FRS 102 of climate-related matters they may need to consider when preparing financial statements and associated narrative reporting.

Governance in brief — FRC issues advice on annual reports for 2021/22 reporting season

11 Nov 2021

The FRC issues advice on annual reports for 2020/21 reporting season

Purpose-driven Business Reporting in Focus — IFRS Foundation creates new board to set global sustainability standards

10 Nov 2021

This edition of Purpose-driven Business Reporting in Focus discusses the IFRS Foundation’s (IFRSF) establishment of the International Sustainability Standards Board (ISSB) and explains the work programme of the IFRSF Technical Readiness Working Group. It also summarises two Prototypes on climate-related disclosure and general requirements that have been published by the IFRSF and sets out next steps, including considerations for companies and UK implications.

UK government publishes draft legislation on climate-related financial disclosures

05 Nov 2021

The Department for Business, Energy & Industrial Strategy (BEIS) has published draft regulations requiring UK public interest entities, Alternative Investment Market (AIM) companies and high turnover companies and Limited Liability Partnerships (LLPs) to make climate-related financial disclosures. The regulations, which amend the Companies Act 2006, will take effect for periods commencing on or after 6 April 2022.

IFRS Foundation creates new sustainability standards board

03 Nov 2021

The IFRS Foundation has announced the creation of its new International Sustainability Standards Board (ISSB) that will develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs.

Climate-related disclosures prototype

03 Nov 2021

The IFRS Foundation has released a climate-related disclosures prototype that is the proposal of the Technical Readiness Working Group (TRWG) for the first thematic standard of the ISSB.

Joint statement by the FCA, PRA, TPR and FRC on the publication of Climate Change Adaptation Reports 

01 Nov 2021

The Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), The Pensions Regulator (TPR) and the Financial Reporting Council (FRC) have issued a joint statement on the publication of their Climate Change Adaptation Reports.

FRC Lab publishes a report on better practice TCFD reporting

01 Nov 2021

The Financial Reporting Lab ("the Lab") has published a report to help companies prepare for mandatory Taskforce on Climate-related Financial Disclosures (TCFD) reporting.

ESMA announces enforcement priorities for 2021 financial statements

29 Oct 2021

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2021 financial statements will focus on. A special focus is on COVID-19 and climate-related disclosures.

EC event on sustainability reporting standards and the future of sustainability reporting

28 Oct 2021

The European Commission (EC) organises a side event to COP 26 with the participation of the European Financial Advisory Reporting Group (EFRAG).

FRC publishes findings on the quality of corporate reporting in 2020/2021

27 Oct 2021

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2020/2021. The report sets out the FRC’s expectations of areas of corporate reporting that require improvement and highlights the ten most frequently raised topics where improvements to reporting quality are needed.

Annual report insights 2021 — Surveying FTSE reporting

26 Oct 2021

Our latest annual reporting survey, Annual report insights 2021, provides insights into practices in annual reporting, focusing on areas where requirements have changed, where regulators are focusing or where innovative practices are emerging.

The Climate Financial Risk Forum publishes its second set of guides to help the financial industry to address climate-related financial risks

22 Oct 2021

The Climate Financial Risk Forum (CFRF), jointly established in March 2019 by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), has published its second set of guides to help the financial industry effectively manage climate-related financial risks.

UK Government publishes roadmap setting out details on new sustainability disclosure requirements

20 Oct 2021

The UK Government has published a roadmap setting out details of new economy-wide sustainability disclosure requirements, and the legislative and regulatory changes that will be made to deliver them. These will, for the first time, bring together UK sustainability reporting requirements under one integrated framework. The roadmap emphasises the need for high-quality, reliable, and internationally comparable sustainability information. This is necessary to improve decision-making, build trust and address risks of greenwashing.

New TCFD status report, additional and updated guidance

15 Oct 2021

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published a fourth status report providing an overview of the extent to which companies in their 2020 reports included information aligned with the core TCFD recommendations published in June 2017.

FRC to host webinar to discuss key findings of recent corporate reporting reviews

11 Oct 2021

The Financial Reporting Council (FRC) is hosting a webinar to discuss the findings of its most recent corporate reporting reviews.

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