Firms to disclose climate risk under new plans set out by government

New green plans unveiled by the government will require listed companies to disclose climate risk, it has been announced.

The UK will become the first country in the world to make Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosures fully mandatory across the economy by 2025, going beyond the ‘comply or explain’ approach. The decision on climate disclosure has been made so that investors and businesses can better understand the material financial impacts of their exposure to climate change, price climate-related risks more accurately, and support the greening of the UK economy.

Chancellor Rishi Sunak said the such reporting was part of a wider plan to help the country remain anopen, attractive international financial centre, and extend its global leadership in green finance and financial technology. As well as the mandatory climate risk reporting, the plans also include issuing the UK’s first ever Sovereign Green Bond, reviewing the UK’s listings regime to attract the most innovative firms, and leading the global conversation on new technologies like stablecoins and Central Bank Digital Currencies.

Recognising that financial services are a critical enabler in the drive for net zero, the Chancellor outlined new proposals to support sustainable financial flows and extend the UK’s global leadership in green finance ahead of hosting COP26.

Of the plans, Sunak commented: “We are starting a new chapter in the history of financial services and renewing the UK’s position as the world’s pre-eminent financial centre. Our plans will ensure the UK moves forward as an open, attractive and well-regulated market, and continues to lead the world in pioneering new technologies and shifting finance towards a net zero future.”