Audit watchdog calls on firms to improve reporting on climate change issues
Businesses are falling short of investors’ expectations for clearer reporting on climate-related issues, according to a report published today by the audit watchdog.
A report from the Financial Reporting Council (FRC) said that “while reporting on climate change is an evolving practice, expectations are changing rapidly”.
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The FRC said its report “highlights the gap between current reporting and investor expectations and calls on companies to bridge this gap”.
The report called on companies to use the Task Force on Climate-related Financial Disclosures (TFCD) framework to report on climate-related issues.
However, the report said 61 per cent of FTSE 100 companies make no mention of TFCD and only 16 per cent mention climate change in the chair and chief executive statements in their annual reports.
The UK Government expects all listed companies and large asset owners to disclose in line with the TCFD recommendations by 2022.
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Earlier this year the FRC outlined the responsibility of boards to consider their impact on the environment and the likely consequences of long-term business decisions.
“Boards should, therefore, address and where relevant, report on the effects of climate change,” the FRC said.
Sir Jon Thompson, chief executive of the FRC, said: “Investors are rightly demanding more information and greater transparency from companies on the challenges posed by climate change.
“As societal and investor expectations evolve, alongside the regulatory environment, it is clear companies need to rapidly increase their transparency and improve their reporting to meet this demand.
“The FRC itself recognises the need to play a more active role in this space and this report is an important step in recognising climate change as a priority and building on the FRC’s activities.”