Rolling our mandatory TCFD reporting
In a speech outlining the government's 'vision' for the future of the UK financial services sector, UK Chancellor Rishi Sunak identified the need to address climate risk as a key priority.
Among other measures, Mr Sunak announced the UK’s intention to become the first G20 country to 'mandate climate disclosures by large companies and financial institutions across the economy', by 2025.
The announcement was accompanied by a report and implementation roadmap from the UK joint regulator and government TCFD Taskforce, outlining an 'indicative pathway' to achieving this goal over the next five years, with most of the change set to occur by 2023.
Roadmap for mandating TCFD disclosure: indicative timeframes
The Roadmap outlines a strategy with indicative timeframes/milestones, for the progressive roll out of mandatory TCFD reporting across seven categories of organisation - listed commercial companies; UK-registered companies; banks and building societies; insurance companies; asset managers; life insurers and FCA-regulated pension schemes; and occupational pension schemes – over the next five years.
Annex A at page 22 of the accompanying report provides a summary of the planned roll out of regulatory changes, including indicative timeframes for each category of organisation.
Figure 1 at page 5 of the roadmap provides a consolidated overview of the information.
It's suggested that organisations in every category use the roadmap to plan for the changes. The roadmap suggests that organisations should 'consider taking the necessary steps now to build their capabilities and iteratively refine their climate data and the resulting disclosures'.
Support for global sustainability standards with a view to 'endorsement and implementation in due course'
The Taskforce also expressed support for the development of global standards as put forward in the IFRS Foundation's consultation, as the best path to achieving improved comparability of reporting within the UK and internationally. The Taskforce states,
'To achieve a high level of comparability across jurisdictions, consistent disclosures are required. The UK Taskforce considers that, if arrived at sufficiently quickly, this would optimally be achieved through international standards for climate-related and other sustainability disclosures. To this end, the UK Taskforce strongly supports the International Financial Reporting Standards (IFRS) Foundation’s proposal to create a new, global Sustainability Standards Board, as well as complementary work underway on harmonisation by an alliance of voluntary standard-setting organisations.'
The Taskforce adds that it will monitor developments on the issue and 'consider an appropriate process for possible endorsement and implementation of international standards in due course'.
[Sources: Chancellor Rishi Sunak, statement to the House – Financial Services 09/11/2020; A Roadmap towards mandatory climate related disclosures; Interim Report of the UK’s Joint Government Regulator TCFD Taskforce]
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