Special edition of FCA Primary Market Bulletin on climate-related reporting

The Financial Conduct Authority (FCA) has published the 36th edition of its Primary Market Bulletin (PMB), which is focused on climate-related disclosure requirements for listed companies.

The PMB follows the introduction of Listing Rule 9.8.6R(8) which requires premium listed companies to make disclosures in compliance with the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations and Recommended Disclosures on a comply or explain basis for financial years beginning on or after 1 January 2021 (see our briefing here).

Key points from the PMB include the following:

• Consultation on technical note – The FCA is consulting on a new technical note to provide further guidance on the disclosure requirements. The note covers, amongst other things, expectations around explanations for non-compliance and the role of third party advisers in preparing disclosures
• Supervisory strategy on TCFD-aligned reporting – Whilst the FCA is responsible for monitoring and enforcing compliance with the Listing Rules that cover TCFD-aligned disclosures, the Financial Reporting Council (FRC) will also be heavily involved in monitoring disclosures by listed companies. If a company’s disclosures do not appear to meet the Listing Rule requirements, in the first instance the FRC may ask for corrective action to be taken, including seeking an undertaking that disclosures will be enhanced in the next reporting year.
• Sanctions for non-compliance – If a listed company fails to include TCFD-aligned disclosures in their annual report, the FCA will request that a company publish a separate TCFD statement via an RIS as soon as possible. The FCA may use its full range of powers to deal with any non-compliance, including imposing sanctions where appropriate.

The FCA is consultation on imposing the same disclosure requirements on standard listed companies under LR 14 has closed (see our blog post here) and the PMB confirms that the FCA expects to make rules in this area before the end of the year.