Featured Product

    HM Treasury Outlines Roadmap for Climate Risk Disclosures in UK

    November 09, 2020

    HM Treasury published an interim report that outlines the UK approach to implementing the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). The report makes a case for mandatory TCFD-aligned disclosures, sets out an indicative path toward implementing these disclosures, explains the key considerations in developing the roadmap, and outlines the next steps in the area of climate risk disclosures. The roadmap presents a coordinated strategy for seven categories of institutions: listed commercial companies; UK-registered companies; banks and building societies; insurance companies; asset managers; life insurers and FCA-regulated pension schemes; and occupational pension schemes. In a separate statement, the BoE Governor Andrew Bailey welcomed the government decision to issue the first Sovereign Green Bond as well as the announcement to press ahead with work on central bank digital currencies.

    The roadmap sets out a timeline for the series of actions to be taken by regulators and government departments over the next five years. The government has announced that UK intends to introduce fully mandatory climate-related financial disclosure requirements by 2025, with a significant portion of mandatory requirements in place by 2023. The roadmap illustrates how coverage of disclosures could increase each year as potential new regulatory or legislative measures come into force, subject to the outcomes of relevant regulators’ and government departments’ consultation processes and other statutory requirements such as cost-benefit analysis. The UK Taskforce recognizes the challenges that organizations face in the current environment. However, if these steps are taken now, the UK Taskforce expects that by 2023 climate reporting will be more comprehensive, removing obstacles that arise from the flow of information along the investment chain. An important focus of the regulators’ work over the coming years will be to help facilitate this evolution in climate disclosure. 

    The interim report highlights that regulators and government departments will assess organizational characteristics to ensure proportionate implementation. Over time, it is likely to be necessary to set more detailed disclosure expectations and some cases may require a phased implementation. The roadmap highlights that, PRA-regulated firms, including banks and building societies and insurance companies, will be subject to the PRA supervisory expectations to disclose their climate-related financial risks and opportunities by the end of 2021. The coverage of disclosures, based on illustrative calculations in terms of the total balance sheet assets of these organizations at December 31, 2019, has been indicated in the roadmap, with the coverage expected to increase progressively until 2023. In 2024-25, further refinement to measures may be considered, including in response to evolving best practice. These proposed disclosure requirements are subject to the outcome of future policy development, consultation, and other regulatory processes. The Annex to the interim report summarizes the implementation approach for the seven categories of institutions.

    As a next step, the government will provide an update on progress in the 2022 refresh of the Green Finance Strategy. The Taskforce expects that it may be necessary, in due course, to consider setting more detailed expectations for disclosures to supplement the TCFD recommendations and enhance comparability across UK organizations. Given the interlinkages between UK organizations and the global economy, it is also important to be able to compare UK organizations with those in other jurisdictions. To this end, the UK Taskforce strongly supports the IFRS Foundation’s proposal to create a new, global Sustainability Standards Board as well as the complementary work underway on harmonization by an alliance of voluntary standard-setting organizations. UK regulators and government departments will continue to work with international organizations to support a consistent approach to climate disclosures. As and when progress is made toward international standards for climate disclosures, UK Taskforce member organizations will consider how these might be implemented in the UK.

     

    Related Links

    Keywords: Europe, UK, Banking, Insurance, Securities, Climate Change Risk, ESG, Reporting, Green Bonds, TCFD, Disclosures, PRA, BoE, FCA

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    News

    UK Authorities Issue Regulatory and Reporting Updates for Banks

    The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.

    June 15, 2022 WebPage Regulatory News
    News

    BCBS Issues Climate Risk Principles while HKMA Expresses Its Support

    The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.

    June 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8280