UK’s audit watchdog urges companies to come clean on impact of climate change

The UK is now the first country to require mandatory disclosures on climate change, according to Chancellor Rishi Sunak, who told the House of Commons on 9 November that companies would have to report on the financial impacts of climate change on their businesses within the next five years.

“We are starting a new chapter in the history of financial services and renewing the UK’s position as the world’s pre-eminent financial centre,” Sunak said. “By taking as many equivalence decisions as we can in the absence of clarity from the EU, we’re doing what’s right for the UK and providing firms with certainty and stability.”

Sunak said companies would be required to report in line with recommendations from the Task Force on Climate-related Financial Disclosures (TCFD), which was launched in 2015 by the International Financial Stability Board.

The TCFD said companies should report on issues such as whether climate change will increase or decrease their sales.

The FRC said it supports the introduction of global standards on non-financial reporting but said for the meantime companies should report against the TCFD’s recommendations.

Sir Jonathan Thompson, chief executive of the FRC, said: “Users of corporate reports expect more from companies, auditors, regulators and standard setters in terms of climate change reporting.

“While this review highlights some bright spots of better practice in both corporate reporting and auditing, we also found that more needs to be done. I know that this is a difficult time to ask for more, but now is the time for all of us to raise the bar.”

Source: Private Equity News