Last June, the FCA has published new proposals on climate-related disclosure rules for listed companies and certain regulated firms. The proposals followed the introduction of climate-related disclosure rules for the most prominent listed commercial companies in December 2020 which are aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
In the consultations the FCA proposed basically 2 major rules in order to help markets, investors and ultimately consumers better understand the impact of climate change and make more informed decisions.
- to extend the application of its TCFD-aligned Listing Rule for premium-listed commercial companies to issuers of standard listed equity shares
- to introduce TCFD-aligned disclosure requirements for asset managers, life insurers, and FCA-regulated pension providers, with a focus on the information needs of clients and consumers
Last week, the International Capital market Association ( ICMA ) responded to the UK FCA CP21/18 propositions on climate-related disclosure rules for listed companies and certain regulated firms.
The answer focuses on the parts that are relevant to the international bond market and reflects the views of ICMA and its constituencies, primarily feedback from the Executive Committee of the Principles (Green & Social Bond Principles, Sustainability Bond Guidelines and Sustainability-Linked Bond Principles); the ICMA Legal and Documentation Committee (LDC); the ICMA Asset Management and Investors Council (AMIC) and the ICMA Corporate Issuer Forum (CIF).
ICMA recognizes the importance of implementing a standardised and globally recognised disclosure regime for issuers as proposed by the FCAAS as it would “contribute to address the issue by converging the evaluation of issuers against core climate-related KPIs”, add more transparency, a global clearer understanding from all stakeholders and reduce the costs of using various methodologies.
But the answer from the group also take into consideration the possible impacts of an extension of the TCFD-aligned disclosure rules on some issuers such as the sovereigns, the special purpose vehicles (SPV) issuers in securitisation structures, or issuers with shares admitted to listing or trading overseas.
Part of ICMA’s answer also questioned either prospectus worth more than the periodic disclosure made in annual reports which are “updated regularly, and seems likely to be a more effective vehicle for climate-related disclosures than the prospectus, which is only correct as at its date and is not updated throughout the life of the security.”
In its answer, ICMA underlins the importance of both the SASB metrics and the IFRS :
“From an issuer’s point of view, the uniform approach to sustainability reporting provided by the SASB metrics is helpful, while allowing issuers the flexibility to determine which of the SASB recommendations are relevant to them and how to report on them. The SASB Materiality Map is a particularly useful resource. It is also important to acknowledge the IFRS Foundation’s work on an international reporting standard on sustainability.”ICMA
Article: Joana Foglia – Source: ICMA, FCA