On 10 August 2023, the FCA published Primary Market Bulletin 45.
Primary Market Bulletin 45 focuses on the International Sustainability Standards Board’s (ISSB) publication on 26 June 2023 of its first 2 IFRS Sustainability Disclosure Standards (ISSB standards):
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
- IFRS S2 Climate-related Disclosures.
The FCA welcomes the publication of the two standards which deliver, for the first time, a global reporting standard for corporate sustainability disclosures.
In this edition of the Primary Market Bulletin, the FCA outlines the following:
- The key features of the FCA’s process for implementing the standards and plans for consultation.
- How the FCA will continue to supervise existing disclosures under the Task Force on Climate-related Financial Disclosures framework, until any new requirements are implemented.
- Advice for issuers on what they can do now to prepare for any future obligations relating to reporting on the ISSB standards.
The Government is committed to introducing mandatory reporting against the ISSB standards, subject to a formal assessment and endorsement process. The Secretary of State for Business and Trade will be responsible for the endorsement decision. It aims to complete this assessment and endorsement process within 12 months of the final standards being published. Two advisory committees are being established to support the Secretary of State’s decision-making on endorsement and to coordinate the implementation of reporting requirements by Government and the FCA. One committee will focus on public policy and implementation (the UK Sustainability Disclosure Policy and Implementation Committee), and the second committee—the UK Sustainability Disclosure Technical Advisory Committee – will focus on the technical aspects of the standards for endorsement.
The FCA expects to consult in the first half of 2024 on proposals to implement disclosure rules referencing UK-endorsed IFRS S1 and IFRS S2 for listed companies. It will take into account inputs to the Government’s endorsement process and its own cost-benefit analysis. Assuming the Government’s endorsement process is completed in the timeframe envisaged, the FCA’s aim is to finalise its policy position by the end of 2024, with a view to bringing the new requirements into force for accounting periods beginning on or after 1 January 2025. The first reporting would begin from 2026. The FCA will also consult on the scope and design of the new regime. At the same time as consulting on its policy approach in relation to the ISSB standards, it will consult on guidance that will set out its expectations for listed companies’ transition plan disclosures.