Top UK companies face tougher climate disclosure regulations
BRITAIN’S TOP listed companies must disclose how climate change affects their business, using globally agreed guidance, or explain to investors why they have not, the Financial Conduct Authority (FCA) said.
Investors increasingly favour companies with business models likely to prove robust as climate change raises the risk of storm and flood damage and reduces the value of carbon-intensive fossil fuel assets.
FCA chief executive Andrew Bailey said: “The changes we propose will help to provide the transparency the market needs to be able to assess how well companies are adjusting to the risks of climate change.
“Improved disclosures will support better asset pricing and enable investors to make more informed choices about where to allocate their capital, which will ultimately support the transition to a low carbon economy.”
The FCA proposes that all commercial companies with a premium listing make climate-related disclosures that conform to an approach set out in 2017 by the Taskforce on Climate-related Financial Disclosures.
There are 480 premium-listed companies with a combined capitalisation of £2.3 trillion. The proposal is that they must make disclosures or explain why they cannot.
The watchdog also said in a consultation paper it would consider extending the proposed rule to a wider range of listed companies. For some of them a binding rule may not be achievable for now as they have further steps to take to make disclosures of the highest standards.