The Financial Conduct Authority (FCA) has published a consultation paper (CP21/18) on proposals to require standard listed companies to make additional climate-related financial disclosures.
The consultation follows the introduction of a rule (Listing Rule 9.8.6(8)) requiring premium listed companies to report climate-related information in line with the Recommendations published by the Task Force on Climate-related Financial Disclosures (the TCFD Recommendations) on a comply or explain basis. For further information on the new requirements for premium listed companies, which apply for financial years starting on or after 1 January 2021, see our briefing.
The FCA is proposing to extend these requirements to issuers of standard listed equity shares listed under LR 14 (excluding standard listed investment entities and shell companies). Under the proposals, for accounting periods beginning on or after 1 January 2022, standard listed companies would be required to include a statement in their annual financial report which sets out whether the report contains disclosures consistent with the TCFD Recommendations, and to explain why if it does not.
The new rule for standard listed companies – and associated guidance – would be located in LR 14 and is intended to directly mirror the structure and wording of the rule and associated guidance for premium listed commercial companies.
The FCA is seeking feedback on whether, and how, to extend the application of these requirements to issuers of standard listed debt/debt-like securities (listed under LR 17), standard listed issuers of global depositary receipts (GDRs) (listed under LR18), and standard listed issuers of shares other than equity shares.
The FCA is also seeking views on environmental, social and governance (ESG) integration in UK capital markets. In particular, it is looking to generate discussion and engage stakeholders on issues related to ESG-oriented debt instruments, and ESG data and rating providers.
The consultation closes on 10 September 2021 and the FCA aims to publish the final rules by the end of 2021.
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