FCA Publishes New Listing Rule and Guidance on Climate-Related Disclosures Applicable to Standard Listed Companies

December.30.2021

On 17 December 2021, the Financial Conduct Authority ("FCA") announced a new Listing Rule on climate-related disclosures in its policy statement PS12/23. The new Listing Rule will apply to issuers of shares (or global depositary receipts representing shares) admitted to listing on the standard segment of the Official List maintained by the FCA for accounting periods beginning on or after 1 January 2022. The first annual financial reports subject to the new rule will therefore be published in early 2023.

Relevant issuers will need to state in their annual financial reports whether their climate-related disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures ("TCFD") on a "comply or explain" basis. The issuers will be required to:

  • confirm whether or not they have made disclosures consistent with the TCFD's recommended disclosures in their annual financial report;
  • if disclosures are not consistent with some, or all, of the TCFD's recommended disclosures, provide an explanation as to why they were not complied with or a description of how alternative disclosures have been made;
  • if disclosures are included in a document other than their annual financial report, provide an explanation as to the location of the disclosures; and
  • specify where the disclosures consistent with the TCFD’s recommended disclosures can be found in their annual financial report.

The FCA has also provided guidance to listed companies that are headquartered and/or operating in a country that has made a commitment to a "net zero economy" (as the UK has done under the Climate Change Act 2008). The FCA is seeking to encourage issuers to set out the extent to which they have considered such commitment in establishing their transition plans when making strategy disclosures to the market.

The FCA expects enhanced climate-related disclosures as a result of this change to the Listing Rules will lead to better informed market and, in turn, more accurate valuations of securities.