Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs
Read the full outcome
Detail of outcome
From 24 March to 5 May 2021, the Department for Business, Energy and Industrial Strategy (BEIS) consulted on proposals to introduce mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs.
The consultation sought views on the scope of requirements, the depth of requirements, the appropriate guidance, and an appropriate monitoring and enforcement regime.
Feedback has been used to help to ensure BEIS introduces a fair, proportionate approach which delivers an improvement on both the quantity and quality of climate-related financial disclosures. To support our transition to net zero, the government considers it important to ensure that companies with a material economic or environmental impact or exposure assess, disclose and ultimately take action on climate-related risks and opportunities.
This approach was reiterated in the recently published Net Zero Strategy - a comprehensive roadmap outlining measures to transition to a green and sustainable future. Accordingly, the proposals set out in the consultation document aimed to significantly increase the proportion of companies taking such actions. This will in turn provide investors with more of the information they need to adequately understand and manage climate-related financial risks and provide other stakeholders with a greater level of information on climate-related matters.
Overall, the proposals consulted on received widespread support. Respondents were pleased to see government taking action in this space, and appreciative of the clear timeline being set for companies and LLPs to prepare for forthcoming requirements. As a result of the consultation process, two policy changes have been made – the introduction of a qualitative scenario analysis requirement, and closer alignment of the regulations to the language used in the Task Force on Climate-related Financial Disclosure (TCFD) recommendations themselves. Both changes are in response to strong and clear stakeholder feedback and will ensure the regulations are better equipped to meet our stated policy objectives.
The inclusion of qualitative scenario analysis influences the costs of this policy on companies and LLPs, and this is reflected in the final stage Impact Assessment. The final stage Impact Assessment reflects our chosen policy of mandatory qualitative scenario analysis from 2022 (Option 1b within the Impact Assessment). We believe that this option directly responds to stakeholder feedback on the issue, whilst also balancing our stated policy objectives to increase the quantity and quality of climate-related financial disclosures in a proportionate manner.
Detail of feedback received
|
Stakeholder |
Number |
Percentage |
|---|---|---|
| Trade association |
39 |
28.47% |
| Professional body |
8 |
5.84% |
| Civil society body |
13 |
9.49% |
| Consultancy |
3 |
2.19% |
| Company |
37 |
27.01% |
| Financial institution |
15 |
10.95% |
| LLP |
4 |
2.92% |
| Accountancy firm |
10 |
7.30% |
| Academic |
3 |
2.19% |
| Other |
5 |
3.65% |
| Total |
137 |
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Original consultation
Consultation description
This consultation seeks views on proposals to mandate climate-related financial disclosures by publicly quoted companies, large private companies and Limited Liability Partnerships (LLPs).
These proposals build on the expectation set out in the government’s 2019 Green Finance Strategy, that all listed companies and large asset owners should disclose in line with the Task Force on Climate-related Financial Disclosure (TCFD) recommendations by 2022.
The proposals have been developed in cooperation with the HM Treasury-led TCFD , which has considered an approach to economy-wide mandatory climate-related financial disclosure, as set out in the 2020 Roadmap and Interim Report. The proposals are an important step towards the UK’s intention to become the first G20 country to make TCFD-aligned disclosures mandatory across the economy as set out by the Chancellor on 9 November 2020.
See the BEIS consultation privacy notice.
Please do not send responses by post to the department at the moment as we may not be able to access them.
Documents
Updates to this page
Last updated 28 October 2021 + show all updates
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Government response and final stage impact assessment added.
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First published.