UK to enforce mandatory TCFD reporting from April 2022
The UK Government has today (29 October) confirmed it will make it mandatory for large companies to disclose information in alignment with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), becoming the first G20 nation to enshrine it into law.
The UK Government has confirmed that large UK-registered companies will have to disclose climate-related financial data from April 2022. This makes the UK the first G20 country to enshrine the mandate into law, subject to Parliament approval.
From 6 April 2022, more than 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis – in line with the TCFD.
Energy and Climate Change Minister Greg Hands said: “If the UK is to meet our ambitious net-zero commitments by 2050, we need our thriving financial system, including our largest businesses and investors, to put climate change at the heart of their activities and decision making.
“By mandating large businesses to disclose their climate risks and opportunities – the first G20 country to do so – we are showing global leadership by making our financial system the greenest in the world.”
Series of events
The Government first unveiled new proposals for mandatory climate reporting last November and updated the plans again in March this year. Any company with more than 500 employees and more than £500m in annual turnover in the UK will have to disclose potential risks associated with climate change and the net-zero transition into annual reports.
A consultation from the Department for Business, Energy and Industrial Strategy (BEIS) was launched with a view to enforcing the report approach from April 2022.
Then, in June, the Chancellor of the Exchequer Rishi Sunak met with finance ministers in London, with discussions leading to a historic agreement that G7 nations will mandate climate reporting in line with TCFD requirements.
G7 finance ministers made a commitment at the meeting to make it mandatory for corporates to report climate impacts and investment decisions, alongside new measures to strengthen central company beneficial ownership registries to crack down on environmental crime.
The agreement to mandate climate disclosure does not yet have a timeframe attached, but the wider G20 group of nations are also set to discuss the topic, potentially meaning that an international agreement could be achieved prior to the COP26 climate negotiations in Glasgow this November.
Earlier this month, it was revealed that more than 1,000 additional organisations had voiced support for the TCFD, bringing the combined market capitalisation of all supporters to $25.1trn (£18.3trn).
The TCFD’s latest annual Status Report confirmed that the number of organisations voicing support for the Task Force’s recommendations increased by more than one-third year-on-year – the biggest annual increase to date. Now, more than 2,600 organisations have voiced support. Represented in this cohort are businesses and other organisations spanning 89 countries and every major economic sector. 83 of the world’s largest companies have made TCFD-related commitments, up from 60 this time last year.
edie this year launched an updated Explains guide answering important questions for businesses looking to align their reporting with the TCFD's recommendations. Click here to download your free copy of that guide, kindly sponsored by Inspired Energy.