Corporate reporting – BEIS consultation on climate-related disclosures
The Department for Business, Energy and Industrial Strategy (BEIS) has launched a consultation on mandatory climate-related disclosures by publicly quoted companies, large private companies and limited liability partnerships (LLPs). This was anticipated and is part of a gradual shift which moves increasingly towards consideration of a broader group of corporate stakeholders, greater transparency and, increasingly, embracing sustainability.
Companies and LLPs in scope
The consultation paper proposes that the disclosure requirements would apply to:
- UK companies that are currently required to produce a non-financial information statement (that is, companies with more than 500 employees which are listed, or are banking or insurance companies);
- AIM companies with more than 500 employees; and
- other companies and LLPs which have more than 500 employees and a turnover of more than £500 million.
The disclosure requirements
Companies that are in scope will be required to include climate-related financial disclosures in the non-financial information statement within their strategic report in respect of accounting periods starting on or after 6 April 2022.
The disclosures will have to be in line with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) [see here] on: (i) governance; (ii) strategy; (iii) risk management; and (iv) metrics and targets. The proposed new rules would not require disclosures in line with the 11 more detailed TCFD recommended disclosures.
Under the Listing Rules (see LR 9.8.6(8) here), premium listed companies are already required to make climate-related disclosures. BEIS intends the proposed rules to be complementary to the FCA’s rules.
The consultation closes on 5 May 2021. The legislation to introduce the new disclosure requirements will be introduced when parliamentary times allow – likely later in 2021 with implementation beginning in 2022.
Published 30 April, 2021