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

CDSB publishes framework for reporting environmental information and natural capital

12 Jun 2015

The Climate Disclosures Standards Board (CDSB) has published a framework for the reporting of environmental information and natural capital in mainstream reports such as the annual report.

CDSB seeks views on updated environmental reporting framework

20 Feb 2014

The Climate Disclosure Standards Board (CDSB) has published a consultation draft of the second edition of its 'CDSB Framework', which is designed to assist in the preparation and presentation of specific environmental information for the benefit of investors. Compared to the existing framework, the consultation draft proposes to extend the scope of environmental reporting beyond climate change to include natural capital information about water and forest commodities.

New XBRL taxonomy for climate change reporting released

14 Nov 2012

The Carbon Disclosure Project (CDP) and the Climate Disclosure Standards Board (CDSB) have released an XBRL (eXtensible Business Reporting Language) climate change reporting taxonomy. The new taxonomy is designed to make climate change reporting easier and more streamlined and aims to facilitate the future integration of climate change data into mainstream financial reports.

Proposed XBRL 'Climate Change Reporting Taxonomy' published

07 Sep 2012

The Carbon Disclosure Project (CDP) and the Climate Disclosure Standards Board (CDSB) are calling for comments on a proposed XBRL climate change reporting taxonomy.

Financial institutions call for more climate change information

25 Jan 2011

The United Nations Environment Programme Finance Initiative (UNEP FI) and the Sustainable Business Institute Germany (SBI) have released a report, Advancing adaptation through climate information services – Results of a global survey on the information requirements of the financial sector.

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