The draft requirements issued by the UK Department for Business, Energy & Industrial Strategy (BEIS) cover:

• 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 transferable securities admitted to trading on a UK regulated market, banking companies or insurance companies (Relevant Public Interest Entities (PIEs));
• UK registered companies with securities admitted to AIM with more than 500 employees;
• UK registered companies which are not included in the categories above, which have more than 500 employees and a turnover of more than £500m; and
• LLPs which have more than 500 employees and a turnover of more than £500m.

A key element of the proposal is to evolve existing requirements to align the with the TCFD, rather than to create new requirements.

In total, it is expected that around 1600 companies will be required to implement the TCFD recommendations, starting with financial years on or after 6 April 2022.

“Evolving a market to keep pace with today’s sustainability challenges is not easy. This is an ambitious but proportionate next step to align climate-related financial risk with other business risks in corporate reports. The UK has been a leader in advancing ESG reporting over the past decade in its own market, as well as internationally. Ahead of its G7 Presidency, the UK is leading by example”, said Michael Zimonyi, Policy & External Affairs Director, CDSB.

CDSB Managing Director Mardi McBrien added: “Today marks the beginning of the end of the standalone TCFD report. The proposal executes the Task Force’s mission, to address the absence of material climate-related information in the mainstream financial filings of companies and thus being treated as any other material business risk.”

“A key aspect of the TCFD is to ensure that the impacts of climate change on the business are reflected across the entire annual report. Setting requirements to report financially material risks and opportunities in the strategic report means that companies must also consider how the narrative in the front half of their annual report affects the financial accounts in the back half of the report and adjust those numbers accordingly.” – Said Ravi Abeywardana, Technical Director, CDSB.