The proposals which were first consulted on in March 2020, introduce a new rule in LR 9.8 that will require commercial companies with a UK premium listing (including sovereign-controlled commercial companies) to include a statement in their annual financial report setting out:

• Whether they have made disclosures consistent with the Task Force on Climate-related Financial Disclosures (TCFD’s) recommendations and recommended disclosures in their annual financial report.
• Where they have not made disclosures consistent with some or all of the TCFD’s recommendations and/or recommended disclosures, an explanation of why, and a description of any steps they are taking or plan to take to be able to make consistent disclosures in the future – including relevant timeframes for being able to make those disclosures.
• Where they have included some, or all, of their disclosures in a document other than their annual financial report, an explanation of why.
• Where in their annual financial report (or other relevant document) the various disclosures can be found.

The rule is accompanied by guidance to help listed companies determine whether their disclosures are consistent with the TCFD’s recommendations and recommended disclosures. The guidance also clarifies the limited circumstances in which the FCA would expect in-scope companies to explain rather than disclose.

The FCA is also introducing a Technical Note clarifying existing disclosure obligations set out in EU legislation and in its Handbook, that may already require issuers to disclose information on climate-related (and other environmental, social and governance matters) in certain circumstances.

The new Listing Rule will apply for accounting periods beginning on or after 1 January 2021. The first annual financial reports including disclosures subject to the new rule would then be published in spring 2022. The finalised Technical Note will apply with immediate effect.

The FCA aims to publish further consultation papers to extend the application of TCFD disclosures in early 2021. Its planned next steps were recently set out as part of a Roadmap to mandatory TCFD-aligned disclosures, released by a joint government and regulator taskforce in November.

A press release and the full Policy Statement and Technical Note are available on the FCA website.  Our related Need to know publication is available here.