Revealing All

The Financial Conduct Authority is currently consulting on proposals to extend the application of their climate-related disclosure requirements to all listed companies.  

Aligned with the Taskforce on Climate-related Financial Disclosure (TCFD), these rules would come into force in 2022.  This means your first disclosures would need to be published by 2023. 

Surprised?  The FCA has already introduced these requirements for UK firms with a premium listing.  Late last year, the UK government also unveiled plans to make mandatory TCFD-aligned disclosures a feature of the economy by 2025.  Amid the barbeque smoke in Cornwall, the G7 confirmed climate reporting will become a requirement.  

Regardless of the size of your business, it is likely some degree of climate-related disclosure will be required within the next few years.  

In addition to complying with the TCFD recommendations, you could also soon be asked to address more specific elements of environmental risk.  Consider the market-led Taskforce on Nature-related Financial Disclosure (TNFD) framework launched to help financial institutions measure their impact on biodiversity – a factor rarely considered in corporate decision-making yet critical to functioning markets.  

And this is just the beginning.  We suspect mandatory disclosures will soon stretch way beyond environmental matters. 

The pandemic and major social movements like Black Lives Matter have encouraged some businesses to adopt policies and develop initiatives to address social inequality.  Criticism has followed concerned that these exercises are corporate box-ticking rather than societal improvement.  

Fortune 500 companies have been accused of “sharing” minority board members – turning to the same names to diversify the composition of their boardrooms.  Progress has been disappointing.   

Perhaps mandatory social-impact disclosures would help? 

There is a movement toward socially focused reporting.  This year, 80% of America’s largest employers made their board diversity data public – double the number that reported the same data in 2019.  The UK had intended to mandate gender pay gap reporting for certain companies during 2020, but has now delayed this requirement until October 2021.   

Despite delays and some resistance ‘revealing all’ will probably, eventually, become business as usual.  Are you ready?