New rules will make it compulsory for the UK’s biggest companies to disclose climate-related financial information, ensuring they consider the risks and opportunities they face as a result of climate change.
The UK will become the first G20 country to make it mandatory for the largest businesses to disclose their climate-related risks and opportunities, in line with Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.
The rules are set to come into force from April 2022 and will apply to more than 1,300 UK-registered companies and financial institutions, including publicly traded companies, banks and insurers, as well as private companies with over 500 employees and £500m in turnover.
According to the UK government, the new requirements will help investors and businesses to better understand the financial impacts of their exposure to climate change, and price climate-related risks more accurately, while supporting the ‘greening’ of the UK economy. By applying a common set of requirements aligned with the TCFD recommendations, UK companies will have a uniform way to assess how a changing climate may impact their business model and strategy, and ensure they are well placed to harness opportunities from the UK’s transition to net zero.
“If the UK is to meet our ambitious net-zero commitments by 2050, we need our thriving financial system, including our largest businesses and investors, to put climate change at the heart of their activities and decision making,” said Energy and Climate Change Minister Greg Hands.
Economic Secretary to the Treasury John Glen added: “These TCFD requirements will not only help tackle ‘greenwashing’ but also enable investors and businesses to align their long-term strategies with the UK’s net zero commitments.”