UK's biggest companies to face mandatory climate risk requirements

The UK is set to legally enshrine mandatory requirements for Britain’s largest companies to report on climate-related risks and opportunities.

From April 6 2022, over 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis – in line with recommendations from the Task Force on Climate-Related Financial Disclosures.

This will include many of the UK’s largest traded companies, banks and insurers, as well as private companies with over 500 employees and £500m in turnover.

The Taskforce on Climate- Related Financial Disclosures (TCFD) is an industry-led group which helps investors understand their financial exposure to climate risk and works with companies to disclose this information in a clear and consistent way.

It was launched at the Paris COP21 in 2015 by the Financial Stability Board (FSB) and Mark Carney, the UN Special Envoy on Climate Action and Finance and UK Finance Adviser for COP26, and has since published a clear and achievable set of recommendations on climate-related financial disclosures.

The decision to require mandatory disclosures comes ahead of the G20 and COP26 summits.

The new requirements aim to 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.

Energy and Climate Change Minister Greg Hands said: “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 – the first G20 country to do so – we are showing global leadership by making our financial system the greenest in the world.”