UK regulator announces new TCFD disclosure rules for London premium-listed firms

The FCA is eyeing similar rules for other listed issuers

UK premium-listed companies which do not undertake climate reporting in line with the Task Force on Climate-related Financial Disclosure (TCFD) recommendations will be asked to justify the omission and provide a description of measures being taken to allow them to do so in the future.

The new disclosure rules were announced yesterday by UK securities regulator the Financial Conduct Authority (FCA), after an open consultation on the topic.

Companies identified under the scope of the new rules will be expected to start including a ‘compliance statement’ in their annual reports from spring 2022.

The disclosure rules will only impact commercial businesses with a premium listing on the London Stock Exchange (LSE), which includes commodity majors such as Anglo American, Glencore, Royal Dutch Shell and BHP; and fund houses like Legal & General, Schroders and Aviva.

Securing a premium listing requires companies to meet enhanced disclosure and corporate governance requirements, compared to a ‘standard listing’ on LSE’s Main Market. LSE is currently the primary UK exchange and the largest in Europe.

UK industry trade body, the Confederation of British Industry (CBI), was unable to comment on the new rules in time for publication.

The FCA said it would also consider floating new proposals to strengthen compliance with the new rules in the future. Separately, the regulator plans to issue a new consultation on extending the disclosure requirements to a wider scope of listed issuers in the first half of 2021.

The move by the FCA is in line with the UK government’s goal of achieving widespread TCFD-compliant disclosures by all listed companies and large asset owners by 2022 under its national Green Finance Strategy. The UK has outlined a broader target of introducing mandatory TCFD disclosures – moving beyond a comply-or-explain basis – across the entire economy by 2025.