From 1 October 2021, trustees of certain schemes face new requirements intended to improve the quality of governance and reporting as they address climate-related risks and opportunities. 

TPR's proposed guidance describes what trustees will need to do and report on in order to comply with the new legislation.  The consultation also includes a proposed new appendix to TPR's monetary penalties policy which outlines its proposed approach to imposing penalties for non-compliance with the new regulations.

The proposed guidance complements and should be read alongside the Department for Work and Pension's (DWP's) statutory guidance (link to guidance) which Trustees of occupational pension schemes must have regard to when meeting requirements under the proposed new regulations.  Additionally trustees should refer to the non-statutory guidance (link to DWP website) issued by the Pensions Climate Risk Industry Group (PCRIG). This is non-mandatory guidance but might be helpful for trustees to consider in addition to the statutory guidance which must be followed.

The consultation closes on 31 August 2021 and can be accessed from The Pensions regulator website.

On the draft CSRD, Accountancy Europe notes that common standards for sustainability reporting need to be set quickly as such European standards will also provide the necessary basis for digitisation and assurance. However, Accountancy Europe emphasises the need for coordination of the different sustainability reporting initiatives:

It is important for the EC to build on globally accepted standards and contribute to international convergence, especially with the IFRS Foundation’s global sustainability reporting standards in development. Ultimately, consolidated global standards would be best to meet investors’ and capital markets’ needs for information comparability whilst minimising duplications and unnecessary costs.

The same argument is brought forward in Accountancy Europe's newly released publication A constructive two-way cooperation to Sustainability reporting standard-setting. The publication notes that EFRAG and the IFRS Foundation should coordinate and work together as early as possible to produce aligned standards and to avoid duplications and unnecessary costs. It states:

The EC, EFRAG, and the IFRS Foundation with its International Accounting Standards Board (IASB) have been working together on the financial reporting agenda since 2002. As EFRAG is now expanding its role to standard-setting, this cooperation should be extended to sustainability reporting standard-setting.

Please click to access the following information on the Accountancy Europe website:

• Feedback on the Corporate Sustainability Reporting Directive proposal
• A constructive two-way cooperation to Sustainability reporting standard-setting

In addition, the press release on recent developments contains a list of the members of the Project Task Force for beginning with the development of standards (renamed PTF-ESRS) and a list of the members of a Secretariat set up in order to provide technical expertise, project management and drafting input.

Please click for the following additional information:

• EFRAG press release on recent developments regarding ESRS
• EFRAG press release the Statement of Cooperation signed with GRI
• GRI press release the Statement of Cooperation signed with EFRAG

The Financial Reporting Council (FRC) has approved the CCAB as the recognised SORP-making body for issuing a recognised SORP for LLPs incorporated in Great Britain under the Limited Liability Partnerships Act 2000. The members of the CCAB are; The Institute of Chartered Accountants in England and Wales (ICAEW), The Institute of Chartered Accountants of Scotland (ICAS), The Institute of Chartered Accountants in Ireland (ICAI), The Association of Chartered Certified Accountants (ACCA) and The Chartered Institute of Public Finance and Accountancy (CIPFA).  

SORPS issued by CCAB apply to LLPs preparing accounts under UK GAAP to present a ‘true and fair view’.  CCAB has stated that “the underlying purpose of the SORP is to deal with issues that are specific to LLPs and ensure that, as far as possible, LLPs present financial statements that are comparable with those of other entities”. 

Updates to the LLPs SORP are proposed in response to stakeholder feedback that there is diversity in practice when interpreting whether a division of profit is automatic or discretionary in certain situations. As a result of this review CCAB is proposing:

• Changes to the definitions included in the SORP relating to divisions of profit.
• Further consequential amendments throughout the SORP to ensure consistency of terminology.
• Additional guidance to help determine when an LLP has an unconditional right to avoid delivering cash or other assets to members.
• Changes to the ordering of the SORP to ensure that the guidance on the division of profits is presented together, reduce duplication, and improve the overall flow of the document.

CCAB has also identified some diversity in practice regarding how automatic and discretionary divisions of profit are presented in the cash flow statement. To address this diversity, CCAB is proposing:

• Additional guidance which sets out the basis for alternative classifications of cash flows relating to profit distributions.
• A requirement for LLPs to disclose their accounting policy for classifying share of profits in the cash flow statement and that cash flows be classified consistently from period to period.

A number of other minor clarifications to the SORP are also being proposed including updates to reflect the requirement for large LLPs and groups to produce an energy and carbon report as part of their annual report.  CCAB is also in the process of considering whether amendments made to FRS 102 as a result of the UK's exit from the European Union require changes to the SORP. 

The updated SORP will be effective for accounting periods beginning on or after 1 January 2022, with early adoption permitted.

Click for (all links to CCAB website):

• Press release
• Draft Statement of Recommended Practice — Accounting by Limited Liability Partnerships

The roadmap, which is accompanied by several document, including a report on promoting climate-related disclosures, notes that the goal of international initiatives in the area of financial disclosures must be to achieve globally consistent, comparable, and decision-useful public disclosures by firms of their climate-related financial risks. To further this overall goal, establishing international standards is important, including accommodating interoperability between a global baseline of international standards and national and regional jurisdiction-specific requirements. Therefore, the FSB welcomes the IFRS Foundation’s programme of work to develop a baseline global sustainability reporting standard under robust governance and public oversight, built from the TCFD framework and the work of an alliance of sustainability standard-setters, involving them and a wider range of stakeholders closely, including national and regional authorities.

The FSB surveyed its members in the first half of 2021 to explore national/regional practices (current or planned) of financial authorities on promoting climate-related disclosures. The survey responses indicated that most jurisdictions strongly support the development of a common global baseline of international reporting standards on climate, with many referencing the ongoing work of the IFRS Foundation. They also signalled that international coordination on requirements to climate-related disclosures is critical and that regulatory and supervisory fragmentation must be prevented.

The roadmap notes that the FSB can play an important role in global coordination, including promoting adoption of the anticipated international reporting standards developed by the ISSB, once developed and if endorsed, as a global baseline. Such internationally agreed standards for disclosures as a global baseline would not preclude authorities from going further or at a faster pace in their jurisdictions. The FSB states that it will continue to act as an international forum for sharing experiences across jurisdictions, promoting best practices, and contribute to discussions in other international fora (such as through COP26 and G7 / G20 meetings) and will continue to support the IFRS Foundation’s work to develop a proposal for a baseline global sustainability reporting standard under robust governance and public oversight. As part of this work, the FSB encourages the IFRS Foundation to address the connectivity between proposed sustainability reporting standards to be developed by the ISSB and existing financial accounting standards. Conditional on the endorsement of this standard, the FSB will encourage FSB member jurisdictions to consider the ISSB’s standard for use for cross-border purposes and when setting sustainability-related disclosure requirements, within the context of individual jurisdictions’ regulatory and legal requirements and in a way that promotes consistent and comparable sustainability disclosures across jurisdictions.

The actions and deliverables are described in detail in the roadmap with an indicative timeline for each of these actions and deliverables provided in tabular format on page 12 of the document. Please click for the following additional information on the FSB website:

• FSB Roadmap for Addressing Climate-Related Financial Risks
• Report on Promoting Climate-Related Disclosures
• Access to additional documents published

Whilst use of SASB Standards is voluntary for UK companies the Financial Reporting Council (FRC), in November 2020, issued a statement on non-financial reporting which encouraged companies use the SASB Standards. 

The snapshot shows that:

• there has been an increase in uptake with 54 companies adopting the SASB Standards, the majority (38) of which are in the FTSE 100. 
• Disclosures were largely provided in a separate sustainability report with 59% of companies choosing to disclose there.
• The top four industries choosing to adopt SASB Standards are financials, services, resource and transformation and food and beverage.
• Other frameworks being adopted by these companies include the United Nations Sustainable Development Goals (SDG), Carbon Disclosure Project (CDP), Taskforce on Climate-related Financial Disclosures recommendation (TCFD) and Global Reporting Initiative (GRI).

The snapshot provides examples of companies who have adopted the SASB Standards and includes some tips from the Lab to improve the useability and quality of reporting.

The snapshot is available on the FRC website.

As a result of its work and outreach, the FRC has identified a number of challenges that have been grouped into six stages:

• Production — better internal information leads to better decisions and better insight for stakeholders;
• Audit and assurance — reported information is robust and reliable;
• Distribution — information is made accessible to interested parties;
• Consumption — this information leads to better decision making by stakeholders;
• Supervision — information and activity is appropriately monitored and requirements are enforced;
• Regulation — coordinated and coherent regulation leads to efficiency.

For the challenges that must be met in each stage, the paper then explains what the FRC intends to achieve by coordinating within the UK and internationally, by connecting with others across the international environment to foster solutions that are proportionate and effective and by contributing to the discussion through thought leadership, experimentation and coordinated policy consultation responses.

Please click to access the press release and FRC Statement of Intent on Environmental, Social and Governance challenges on the FRC website.

There were two sessions of the webinar, and recordings of them are now available on the IASB website. The slides used during the presentation are also available.

The podcast is hosted by IFRS Interpretations Committee Chair and IASB Vice-Chair Sue Lloyd and Technical Staff member Patrina Buchanan and focuses on configuration or customisation costs in a cloud computing arrangement (IAS 38), costs necessary to sell inventories (IAS 2), other finalised agenda decisions, economic benefits from use of a windfarm (IFRS 16), TLTRO III transactions (IFRS 9 and IAS 20), supplier finance arrangements (IFRS 7 and IAS 7), and the classification of debt with covenants as current or non-current (IAS 1) .

For more information, see the press release on the IASB website.

Participants at the meeting, which was chaired by IASB member Tadeu Cendon, discussed rate-regulated activities, the current agenda consultation, business combinations under common control, agenda decisions of the IFRS Interpretations Committee, the review of the IFRS for SMEs, and the application of IAS 12 Income Taxes. In addition, the EEG received an update on sustainability reporting as well as a general update on IASB projects.

Please click for access to the full report on the IASB website.