On 24 March 2021, the Department for Business, Energy & Industrial Strategy published a Consultation Paper on proposals to mandate climate-related financial disclosures by:
- Relevant Public Interest Entities – UK companies that are currently required to produce a non-financial information statement (i.e UK companies with more than 500 employees that have transferable securities admitted to trading on a UK regulated market, banks and insurers);
- UK registered companies with securities admitted to AIM with more than 500 employees;
- UK registered companies which are not included in the categories above, which have more than 500 employees and a turnover of more than £500m; and
- LLPs which have more than 500 employees and a turnover of more than £500m.
These categories of firm, will be required to make disclosures in line with the four overarching pillars of the TCFD recommendations:
- Governance – the organization’s governance around climate-related risks and opportunities;
- Strategy – the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy and financial planning;
- Risk management – the processes used by organizations to identify, assess, and manage climate-related risks; and
- Metrics and targets – how organizations use these to assess and manage relevant climate-related risks and opportunities.
The Consultation closes on 5 May 2021. The expectation is that regulations will be made by the end of 2021 and will come into force on 6 April 2022, applying to accounting periods starting on or after that date.
Businesses should carefully consider this consultation and its applicability to them, including establishing relevant plans and processes to align to the requirements should they proceed to come into force.