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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 scenarios included in the narrative in the front end of the annual report and the numbers disclosed in the financial statements.

Recently investors have 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. Additionally the UK Government has announced the intention to make Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosures fully mandatory across the economy by 2025. The Financial Conduct Authority (FCA) has committed to introduce TCFD for premium listed companies in 2021 and to consult in the first half of 2021 on extending the scope of these rules, including for asset managers, life insurers and pension providers.

During the 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 will continue to focus on the disclosure of climate-related risks within annual reports as a priority area for 2020/21 and highlights in its Annual Report that it aims to “support the Government’s green finance strategy to embed climate-related issues into corporate reporting and investment decision making”.

The FRC’s year-end letter to Audit Committee Chairs and Finance Directors and the climate thematic review set out its reporting expectations for the coming year.

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 enforcement priorities for 2020 financial statements. The IFRS Foundation has 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.

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

Related resources

ICAEW webinar on the TCFD recommendations

22 Jan 2020

The Institute of Chartered Accountants in England and Wales (ICAEW) will be hosting a webinar looking at the Task Force on Climate-related Financial Disclosures' recommendations in more detail.

FRC announces thematic reviews for 2020/2021

16 Dec 2019

The Financial Reporting Council (FRC) has announced the corporate reporting and audit quality thematic reviews that it will undertake in 2020/21.

IFAC publishes call to action on climate change

12 Dec 2019

The International Federation of Accountants (IFAC) has published a ‘Points of view’ document calling on action from various stakeholders with respect to climate change highlighting that they should all “embrace climate action and be part of the solution”.

A closer look — Climate change

12 Dec 2019

A growing number of scientific projections detail not only potential average increases in global temperatures, but also the consequences, such as rising sea levels and more frequent extreme weather events. Economic forecasts are also increasingly reflecting these impacts, including related factors such as carbon pricing initiatives and changing demand for fossil fuels and renewable energy. It is critical to recognise that the past is no longer a predictor of the future. As a result, investors, regulators and other business stakeholders are increasingly demanding better disclosures on climate change matters and challenging companies that are not factoring the effects of climate change into their critical accounting judgements. This Closer Look publication provides an overview of investor and regulatory focus, and explores a framework for companies to use in responding to climate-related matters, including areas in the financial statements and in narrative reporting that might be affected. It also signposts further guidance and resources.

Accounting Roundup - Closing Out 2019

10 Dec 2019

Closing Out 2019 discusses the significant corporate reporting issues relevant to 31 December 2019 annual reports, covering areas of regulatory focus identified in the FRC’s Annual Review of Corporate Reporting 2018/2019 and the ESMA’s common enforcement priorities for issuers in the European Union, together with other developments in reporting standards and areas of investor interest.

Governance in focus — On the board agenda 2020

05 Dec 2019

As 2019 draws to a close, our annual review of board topics will stimulate your thinking and help prepare you for the year ahead. After pieces on the economic outlook, the Nine Big Shifts and the “Social Enterprise”, we pull together, in one place, a series of articles reviewing many topics on the board agenda across four key themes – responsible business, risk & internal controls, remuneration and year-end reporting & assurance. Our annual review is, once again, a full read as there is much to consider.

Governance in brief — FRC issues advice on annual reports for 2019/20 reporting season

14 Nov 2019

The FRC has issued its Annual Review of Corporate Reporting and annual open letter to finance directors and audit committee chairs covering its perspectives on key developments and areas of focus for 2019/20 annual reports. The report sets out the FRC’s “expectations for corporate reporting to improve trust in business”, emphasising the annual report is a vehicle of trust and stewardship.

FRC publishes findings on the quality of corporate reporting in 2018/2019

30 Oct 2019

The Financial Reporting Council (FRC) has published its Annual Review of Corporate Reporting 2018/2019, which provides the FRC's assessment of corporate reporting in the UK based on evidence from a variety of sources, including the work of the FRC's own Corporate Reporting Review (CRR) team.

FCA publishes feedback statement on climate change and green finance

22 Oct 2019

The Financial Conduct Authority (FCA) has published a Feedback Statement (FS 19/6) on climate change and green finance.

FRC Lab report discussing reporting on climate-related issues

22 Oct 2019

A new report from the Financial Reporting Lab of the UK Financial Reporting Council (FRC) reveals that companies are falling short of investors’ expectations for clearer reporting on climate-related issues. It notes that while reporting on climate change is an evolving practice, investor expectations are changing rapidly.

Annual report insights 2019 — Surveying FTSE reporting

21 Oct 2019

Our latest annual reporting survey, Annual report insights 2019, provides insights into practices in annual reporting, focusing on areas where requirements have changed, where regulators are focusing or where innovative practices are emerging.

Governance in brief — New 2019 reporting requirements for large private companies - a reminder

17 Oct 2019

This publication covers the new governance-related reporting requirements for large private companies in annual reports for periods commencing on or after 1 January 2019.

HM Treasury publishes sustainability reporting guidance for public sector annual reports 2019-2020

03 Oct 2019

HM Treasury has published guidance to assist those in the public sector in meeting sustainability reporting requirements.

Paper on climate-related risk and financial statements

03 Oct 2019

The Australian Accounting Standards Board (AASB) has announced the availability of a paper 'Climate-related Risk and Financial Statements: Implications for Regulators, Preparers, Auditors and Users'.

CRD launches report on alignment between its members' sustainability standards and frameworks and the TCFD recommendations

24 Sep 2019

At the World Congress of Accountants in Australia in November 2018, the Corporate Reporting Dialogue (CRD), which brings together organisations that have significant international influence on the corporate reporting landscape, announced a two-year project focused on aligning the standards and frameworks of its members. A report 'Driving Alignment in Climate-related Reporting' was now launched amongst businesses and investors at the World Economic Forum’s Sustainable Development Impact Summit, during Climate Week NYC.

Recent sustainability and integrated reporting developments

24 Sep 2019

A summary of recent developments at SASB/CDSB, CDSB, ACCA/CAANZ/ICAS, IIRC, and GRI.

Recent sustainability reporting developments

27 Aug 2019

A summary of recent developments at the CFA Institute, CDP, SSE, and GRI.

The Bruce Column — Making the future more realistic than rosy

25 Jul 2019

The Chairman of the International Accounting Standards Board, Hans Hoogervorst, is half way through his second, and final, term as Chairman.

Robert Bruce Interviews – Hans Hoogervorst, Chairman, International Accounting Standards Board

25 Jul 2019

In a wide-ranging video interview Hans Hoogervorst, Chairman of the International Accounting Standards Board, (IASB), talks to Robert Bruce about the risks surrounding climate change, about climate-related financial disclosures, about how the revised Management Commentary Practice Statement will encourage investor-grade non-financial information. He talks about the upcoming Interbank Offer Rate Replacement project, IBOR and its likely accounting consequences, about how he considers the IASB’s Primary Financial Statements Project to be one of the most important pieces of work that the IASB is currently working on, and about the likely outcome of the amendments to the insurance Standard, IFRS17. And finally he discusses whether IFRS have evolved enough to provide security in any future crises, financial or climate, up ahead, and also describes frankly what he feels he has achieved halfway through his final term as Chairman.

European Lab Project Task Force to conduct interviews related to climate-related reporting

19 Jul 2019

The European Lab Project Task Force (PTF) will be conducting interviews in September and October with practitioners who have experience in the reporting or use of climate-related reporting information.

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