FCA confirms plans for TCFD rules from January

London-listed companies need to start their net-zero journey

All companies with a premium listing on the London Stock Exchange (LSE) will be required to make climate-related disclosures from January, the Financial Conduct Authority (FCA) has stated.

Nikhil Rathi, the UK watchdog’s new chief executive, said listed companies would have to report in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) from the start of the new year.

Speaking at the Green Horizon Summit – a three-day event hosted by the City of London, Green Finance Institute and the World Economic Forum – Rathi said disclosure would initially be on a ‘comply or explain’ basis.

This would mean companies would have to explain to shareholders and other stakeholders why they were unable to comply with the disclosures. The premium listing rules cover all companies in the FTSE 100, FTSE 250 and FTSE Fledgling indices.

Later in the year, the FCA would “consider further tightening the rule, moving from 'comply or explain' to mandatory disclosure”, Rathi said.

“We generally expect companies to be able to comply,” he added. “However, we understand that some may need more time to deal with data, analytical or modelling challenges. And this is just the start.”

The FCA planned to extend the disclosure rules to include more issuers during the first half of next year, he said.

The news follows the announcement at the start of November from UK chancellor Rishi Sunak that the government intended to make the TCFD recommendations mandatory for large companies and major institutional investors.

This includes the Local Government Pension Scheme, which manages more than £300bn on behalf of current and former local authority workers.

Audit watchdog the Financial Reporting Council (FRC) has also urged public interest entities to report according to the TCFD’s guidelines. The FRC’s chief executive Sir Jonathan Thompson said it was time to “raise the bar” on climate reporting.

Minerva’s Sustainability Governance framework is fully aligned with TCFD guidelines.

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