Companies ordered to make climate-related financial disclosures

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The Financial Reporting Council (FRC) is demanding that all companies with premium-listing on the London Stock Exchange make climate-related financial disclosures in their annual reports from 2022. The Government will also order all companies with over £500 million turnover and 500 staff to disclose climate-related financial information from April 2022.

The new climate reporting requirements for listed companies were revealed in the FRC’s Annual Review of Corporate Reporting. The move will mean that company accountants and auditors must ensure that organisations provide high quality financial and narrative reporting on climate policies, risks and uncertainties in their reports.

In particular, the FRC wants to ensure that the narrative and the financial reporting by companies agree. Janet Lucke, senior case officer for the corporate reporting review at the FRC told Financial Director the regulator wants to “avoid the pantomime horse syndrome where the two halves are clearly written by two different people who didn’t particularly take account of what the other half was saying.”

James Burgoyne, Divisional Director – Claims & Technical, Brunel Professions said: “It’s important that finance directors and auditors get these new disclosures right. The FRC has teeth, and this year has ordered 15 companies which had not complied with its rules to restate their accounts. Environmental activist organisations may well be scrutinising larger companies’ statements as well. Insurers are affected by these new requirements and it was great to see groups such as Aviva already making climate related financial disclosure.”

The FRC’s press release and Annual Review of Corporate Reporting have been published online. In addition, the government has published a press release about mandatory climate disclosure on its website. Reports about the moves have been published by Financial Director and Accountancy Today.

Brunel secures competitive professional indemnity insurance cover for financial services professionals. To find out more visit the Brunel website or call Mark Sommariva on 0203 475 3275.