Reporting on Taskforce on Climate-related Financial Disclosures (TCFD) will become law in the UK from April 2022.
ON 28 October the UK government’s Department for Business, Energy & Industrial Strategy (BEIS) published the results of a consultation into climate-related financial disclosure for listed companies.
It confirmed that from 6 April 2022, TCFD reporting will be mandated for more than 1,300 of the largest UK-registered companies and financial institutions pending parliamentary approval. These include many of the UK’s largest traded companies, banks and insurers, as well as private companies with more than 500 employees and £500m in turnover.
The announcement also included the introduction of a qualitative scenario analysis requirement and closer alignment of the regulations to language used in the TCFD recommendations themselves.
Economic secretary to the Treasury John Glen said: “These TCFD requirements will not only help tackle greenwashing but also enable investors and businesses to align their long-term strategies with the UK’s net-zero commitments.”
The announcement has been largely welcomed by the investment industry. Chris Cummings, CEO of the Investment Association, said: “These regulations are an important step to taking an economy wide approach to addressing climate change and reaching net zero carbon emissions. TCFD-aligned disclosures are a crucial part of managing the impact of climate change; supporting companies to focus on the effects of climate change on their business and communicating how these are being managed to their investors and other stakeholders.”
For investment managers, Cummings added the disclosures will help the industry “provide the necessary support and challenge, through their stewardship role, to their investee companies, as they transition to more sustainable business models”.
Heather McKay, policy adviser at Sustainable Finance, hopes the roll-out from April will be smooth, especially given the new requirement for reporting language to align with that used by the TCFD.
“The conversation is moving fast,” she said. “The government had better get its skates on to ensure TCFD is rolled out swiftly and credibly. Otherwise, companies will not have the information they need to profit for the long term.”
