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FCA emphasises importance of compliance with new TCFD Listing Rule

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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.

The Bulletin, which follows on from Policy Statement (PS) 20/17 further sets out the FCA's disclosure expectations and supervisory strategy with respect to the new requirement.  It is aimed at a number of different stakeholders including listed companies, their directors and advisors (including external auditors), investors and asset owners more broadly. 

The Bulletin serves to emphasise the seriousness with which the FCA and the Financial Reporting Council (FRC) both view compliance with the new Listing Rule, confirming that the FRC and FCA will work collaboratively to identify instances of non-compliance – including reporting such instances to one another where discovered - and review concerns raised by stakeholders about the quality of TCFD-aligned disclosures.  From 2022, the review of TCFD-aligned disclosures will be embedded into the FRC's routine reviews or premium listed company annual reports.

Where a listed company fails to make a suitable statement under the Listing Rules, the FCA will request that a listed company publishes the TCFD statement via a Regulatory Information Service (RIS) in line with the Listing Rules as soon as possible after discovery, with any non-compliance leading to regulatory action and possible sanctions.

The Bulletin also confirms that following consultation in Consultation Paper (CP) 21/18, the FCA aims to finalise rules for TCFD-aligned disclosures for issuers with standard listed equity shares under Listing Rule 14 (other than standard listed investment companies and shell companies) in time for them to apply for accounting periods beginning on or after 1 January 2022.  It will also, along with the FRC, monitor and enforce compliance with that proposed new rule (Listing Rule 14.3.27R).

Included in the Bulletin is a consultation on the addition of a proposed new Technical Note to the FCA's Knowledge Base which provides further guidance on its disclosure expectations.  Feedback is requested by 13 December 2021.

The Primary Market Bulletin and the proposed Technical Note are available on the FCA website.  

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