Mandatory Climate Disclosures Expected by the End of the Year
While the government is still considering the responses to the consultation, it is still planning to publish regulations by the end of the year, with the new requirements to kick in shortly after.
This legislation is set to affect publicly quoted companies, large private companies, and Limited Liability Partnerships (LLPs). This legislation aims to build on the 2019 Green Finance Strategy published by the BEIS.
Here’s a recap on what we know:
- Regulations are to be made by the end of 2021 and will come into force on the Common Commencement Date of 6 April 2022. This is likely to be an SI using powers under the Companies Act 2006
- This will require the disclosure of climate related financial information in line with the four overarching pillars of the TCFD recommendations (Governance, Strategy, Risk Management, Metrics & Targets.
- Disclosures would need to be outlined in either Strategic Reports or the Energy and Carbon Report, which forms part of the Annual Report.
Several different types of companies will be in scope, based on the original proposals:
- All UK companies that are currently required to produce a non-financial information statement, being UK companies that have more than 500 employees and have transferrable securities admitted to trading on a UK regulated market, banking companies or insurance companies (Relevant Public Interest Entities (PIEs)).
- UK registered companies admitted to AIM with more than 500 employees.
- UK registered companies which are not included in the category above, which have more than 500 employees and a turnover of more than £500m.
- LLPs which have more than 500 employees and a turnover of more than £500m.