The UK is to become the first G20 country to etch into law TCFD-aligned requirements for the largest companies and financial institutions to report on climate-related risks and opportunities.
Pending approval from Parliament, from April 6, 2022, more than 1,300 of the largest firms and financial entities registered in the UK will legally be required to release climate-related financial information, in accordance with recommendations made by the Task Force on Climate-Related Financial Disclosures [TCFD].
The TCFD is an industry body which helps investors understand their financial exposure to climate risk. It works with firms to share climate-related information clearly and consistently.
The entity was launched in 2015 by the Financial Stability Board [FSB] at the COP21 in Paris.
The announcement came in the wake of the UK’s publication of its Net Zero Strategy and in the run-up to the G20 and COP26 summits.
The new legal requirements will ensure that businesses operating in the UK are fully aware of the risks and opportunities they face because of climate change and will encourage big businesses to clearly outline their plans to cut carbon emissions and operate sustainably.
The rules are intended to help investors and businesses become more aware of the financial effects of their exposure to climate change, better calculate risks linked to climate, and facilitate the UK move toward a green economy.
UK companies will be provided with a uniform way to assess how a changing climate may impact their business model and strategy, and ensure they are well placed to capitalise on the opportunities that will rise as the UK transitions to greener energy sources and drives further toward net zero by 2050.
Greg Hands, minister for energy and climate change, commented: “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.
“By mandating large businesses to disclose their climate risks and opportunities – becoming the first G20 country to do so – we are showing global leadership by making our financial system the greenest in the world.”
The legislation consolidates the government’s progress toward making the UK the first G20 nation to mandate TCFD-aligned climate disclosures across the economy.
Photo by Karsten Würth on Unsplash
