FCA Introduces Rule to Enhance Climate-Related Financial Disclosures
FCA published the policy statement PS20/17 to enhance climate-related disclosures by listed issuers and clarify existing disclosure obligations. PS20/17 contains a final rule and guidance that set out a requirement for commercial companies with a UK premium listing to include a compliance statement in their annual financial report. The new rule will apply for accounting periods beginning on or after January 01, 2021. The first annual financial reports subject to this rule would then be published in Spring 2022. PS20/17 also contains a technical note, which applies with immediate effect and clarifies the existing disclosure obligations in the legislation and the FCA Handbook.
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
Keywords: Europe, UK, Banking, Insurance, Securities, PS20/17, TCFD Recommendations, Sustainable Finance, CP20/3, Climate Change Risk, Disclosures, ESG, FCA
Previous Article
EBA Further Clarifies Implementation of Selected COVID-19 PoliciesRelated Articles
BIS Innovation Hub Sets Out Work Program for 2021
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
EC Plans to Consult on Crisis Management and EDIS Framework Revisions
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA Finalizes Remuneration Standards for Investment Firms in EU
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
ECA Recommends Actions to Enhance Resolution Planning for Banks
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA Proposes Rules on Identity Verification of Depositor Protection
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB Publishes Work Program for 2021
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA Issues Update on Move to New Data Collection Platform
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank Publishes Derivation Rules for Reporting by Banks
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED Revises Capital Planning and Stress Testing Requirements for Banks
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.