Financial Conduct Authority  

FCA adds listed firms to climate disclosure regime as rules confirmed

Respondents also said they did not consider that scenario analysis at product level would be useful at this stage. 

The FCA said it would not require firms to disclose information that could be misleading.

It said: “We require firms to explain where and why they have not been able to disclose, as well as the steps they will take to improve the completeness and the quality of disclosure.”

It added: “Our aim is to increase transparency on climate-related risks and opportunities and enable clients and consumers to make considered choices. We recognise, however, that there will be data and methodological challenges for a transitional period. 

“In finalising our position, we have sought to find a balanced and proportionate approach that continues to mobilise the industry forward on climate-related disclosures and encourages the necessary investment in capabilities, while at the same time ensuring that disclosures remain fair, clear and not misleading.”

Listed companies

In a separate policy statement, the FCA discussed extending its climate reporting rules to companies that issue standard listed equity shares.

Issuers of standard listed shares, or equity shares represented by certificates (global depositary receipts) must now include a statement in their annual financial reports setting out whether their disclosures meet the recommendations of the TCFD. If they don’t, they’ll need to explain why.

The FCA stated: “Our final rule forms part of a broader strategic aim to promote transparency on climate change and wider sustainability matters along the value chain. 

“As elaborated in our strategy for Positive Change, launched in November 2021, ‘better corporate disclosures will inform market pricing and support business, risk and capital allocation decisions’.”

The regulator said it is extending the application of the existing climate-related disclosure requirements – on a comply or explain compliance basis – to issuers of standard listed shares and standard listed issuers.

With this expansion of scope, more than 200 additional listed companies will be subject to TCFD-aligned disclosure requirements under the rules.

It will apply for accounting periods beginning on or after January 1, 2022. 

sonia.rach@ft.com

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