On the go: The government is consulting on new rules to mandate climate-related financial disclosures by companies, which will aid pension schemes’ compliance on environmental, social and governance factors.
In a consultation published on Wednesday, the Department for Business, Energy and Industrial Strategy set out plans to legislate for publicly quoted companies, large private companies and limited liability partnerships to disclose climate-related information aligned with the Task Force on Climate-related Financial Disclosure.
To support the UK’s transition to net zero, the government noted that it was vital to ensure “companies with a material economic or environmental impact or exposure assess, disclose and ultimately take actions against climate-related risks and opportunities”.
Companies will be required to report on these matters in the non-financial information statement that forms part of the strategic report, in accordance with the four pillars of the TCFD recommendations on a mandatory basis: governance, strategy, risk management and metrics and targets.
BEIS is planning to lay out regulations by the end of 2021, with these coming into force on April 6 2022, and to be applicable for accounting periods starting on or after that date.
The government noted that these new rules will “also support financial institutions subject to increasing legislative and regulatory expectations, by facilitating the supply of information throughout the investment chain,” such as pension schemes.
In the run up to the Budget announcements in March this year, the minister for pensions and financial inclusion laid out a plan for the upcoming secondary legislation following the Pension Schemes Act, giving priority to new climate change rules.
In a ministerial written statement at that time, Guy Opperman set out the next steps for new legislation after the Pension Schemes Act 2021 received royal assent in February.
He noted that following the consultation published by the Department for Work and Pensions on climate change in January, these regulations will be laid out in the summer, to come into force ahead of COP26.
“This will make the UK the first major economy in the world to legislate for, and bring into practice, the recommendations of the Task Force on Climate-related Financial Disclosures, ensuring climate change is at the heart of the pensions system,” Opperman stressed at that time.
