Climate-related disclosures
Companies and large asset owners will soon be legally required to publish climate-related financial information to help investors and other stakeholders make more informed financial decisions.
The new rules, which are to be laid before Parliament and will be subject to an eight-week consultation, will require the mandatory disclosure of information across four pillars:
- Governance: The company’s governance arrangements for climate-related risks and opportunities, and its risk management processes.
- Strategy: The company’s business strategy in the context of climate change, including how it will manage climate-related risks and opportunities, and its resilience to different climate-related scenarios.
- Risk Management: How the company identifies, assesses and manages climate-related risks.
- Metrics and Targets: The metrics and targets used to assess and manage climate-related risks and opportunities, and the performance against those targets.
Companies will be given flexibility in how they disclose the information, and there will be no mandatory requirement to disclose absolute emissions or detailed emissions reduction targets.
Who will disclose?
- Publicly quoted companies (with a premium listing on the London Stock Exchange)
- Large private companies (with over 500 employees and a turnover of over £500 million)
- UK registered limited liability partnerships (LLPs) with over 500 employees and a turnover over £500 million
- UK authorised open-ended investment companies (OEICs) and UK authorised unit trusts with over £500 million in gross assets
When will the disclosures be required?
Disclosures will be required for accounting periods beginning on or after 6 April 2022 for publicly quoted companies and for accounting periods beginning on or after 1 January 2023 for other organisations.
Why are we introducing mandatory climate-related disclosures?
The UK government has committed to achieving net zero greenhouse gas emissions by 2050. To achieve this, we need to transition to a low-carbon economy. This transition will create both risks and opportunities for businesses.
Mandatory climate-related disclosures will help investors and other stakeholders to understand how companies are managing these risks and opportunities. This information will help them to make more informed financial decisions and support the transition to a low-carbon economy.
Next steps
The government will now consult on the draft legislation for eight weeks. The government response to the consultation responses, and the final legislation, will be published in due course.
Further information
Contact
For enquiries, please email: climate.disclosure@beis.gov.uk
Climate-related disclosures
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