FCA Introduces Rule to Enhance Climate-Related Financial Disclosures

The new rule in PS20/17 requires commercial companies to set out, in their compliance statement, whether they have made disclosures consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) or explain why they have not done so. The instrument giving effect to the new rule is presented in Appendix 1 of PS20/17. Post consultation, FCA has made the following changes to the rule:

• Amended the rule to promote transparency of any steps companies are taking or plan to take to make consistent disclosures in the future
• Provided additional guidance on the limited circumstances in which FCA would expect issuers to explain, rather than disclose
• Provided guidance to clarify that a company’s determination of consistency with the TCFD recommendations should be informed by a detailed assessment of disclosures which considers the TCFD published guidance materials
• Provided additional high-level guidance in relation to the level of detail to be included in disclosures of companies

The final rule will directly impact commercial companies with a UK premium listing. Other listed issuers may also be interested in the plans to consult in the future on extending the rule to a wider scope of listed issuers. As at December 07, 2020, the rule will apply to 460 companies on the FCA Official List. The final technical note will also impact a wider scope of listed issuers, including listed issuers, issuers with securities admitted to trading on regulated markets, and other entities in scope of requirements under the Market Abuse Regulation and the Prospectus Regulation. PS20/17 will also be of interest to sponsors of listed companies, corporate finance and other advisors, accountants and auditors, consumer groups and individual consumers, industry groups, trade bodies and civil society groups, regulated firms, investors, policymakers and regulatory bodies, industry experts and commentators, and academics and think tanks.

FCA is planning to issue a consultation paper in the first half of 2021 on proposals to extend the application of this rule to a wider scope of listed issuers. FCA will also consider consulting on strengthening the compliance basis of this rule. FCA is separately planning to consult on potential client-focused TCFD-aligned disclosures by UK-authorized asset managers, life insurers, and FCA-regulated pension schemes in early 2021.

Related Links

• News Release
• PS20/17 (PDF)

Keywords: Europe, UK, Banking, Insurance, Securities, PS20/17, TCFD Recommendations, Sustainable Finance, CP20/3, Climate Change Risk, Disclosures, ESG, FCA