On 29 July 2022, the Financial Reporting Council (FRC) and Financial Conduct Authority (FCA) published two reports which found that premium listed companies have made significant steps forward in the quality of climate related information provided in their financial reports, but further improvements are needed. The first report provided a review of TCFD-aligned disclosures by premium listed commercial companies and the second report provided a CRR thematic review of TCFD disclosures and climate in the financial statements.
The FRC reviewed a sample of 25 premium listed companies more impacted by climate change and found that companies were able to provide many of the TCFD disclosures expected by the FCA’s Listing Rules and in relation to climate-related reporting in financial statements, marking a significant improvement in comparison with previous years.
However, the FCA identified several areas where companies will need to raise the quality of their disclosures in future years, including:
- Providing more granular information about the effect of climate change on different business sectors and geographies.
- Balancing the discussion of climate related risks and opportunities appropriately.
- Linking climate-related disclosures to other risk management and governance processes.
- Explaining how they have decided which climate-related information should be disclosed.
- Explaining more clearly how the effects of different global warming scenarios and their own net zero commitments may affect the valuation of their assets and liabilities.