FCA Reviews TCFD Disclosures of Premium Listed Companies

The review outlines preliminary observations from a quantitative analysis of the disclosures of all 171 premium listed commercial companies that had published their Annual Financial Report by the end of April 2022 as well as their compliance with the listing rule. The review also outlines targeted and detailed qualitative analysis of the consistency of disclosures with the TCFD framework for a sample of 31 of those companies, including a comparison with the climate-related disclosures in the prior reporting period. The findings of this review are expected to be relevant to companies with a UK premium listing as well as standard listed issuers that are in scope of climate-related disclosure requirements from accounting periods beginning on or after January 01, 2022. The key observations from the quantitative review of compliance and detailed analysis by TCFD pillar are as follows:

• Over 90% of companies self-reported that they had made disclosures consistent with the TCFD’s Governance and Risk Management pillars, but this dropped to below 90% for the Strategy and Metrics and Targets pillars.
• Nearly 81% of companies indicated that they had made disclosures consistent with all seven recommended disclosures.
• Companies indicated that they had made disclosures consistent with the recommended disclosures, though the disclosures appeared to be very limited in content.
• The number of companies making disclosures that were either partially or mostly consistent with the TCFD framework increased significantly compared with 2020.
• The most common reporting gaps were in respect of the more quantitative elements of the TCFD’s recommendations, for example scenario analysis and metrics and targets.
• The levels of detail and consistency in companies’ disclosures were often correlated with sector, size, and risk assessment (that is, the extent to which that company had identified climate change as among principal risks).

As a next step, FCA expects the government to consult in due course on a mechanism to adopt the International Sustainability Standards Board (ISSB) standards in the UK. Following this consultation, FCA will separately consult on adapting the existing TCFD-aligned climate-related disclosure rules for listed companies to reference the final International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards adopted according to the legal and institutional architecture.

Related Link: Review of TCFD-aligned Disclosures

Keywords: Europe, UK, Banking, TCFD, ESG, Climate Change Risk, Disclosures, Listing Rules, Listed Companies, ISSB, Sustainable Finance, Reporting, FCA