COP26: UK to mandate climate disclosures for largest companies

Companies registered in the UK will be required to disclose their climate-related risks and opportunities starting in 2022, the government said Oct. 29 ahead of the UN Climate Change Conference in Glasgow starting Nov. 1.

The moves means the UK will become the first G20 country to make it mandatory for the largest businesses to disclose climate-related financial information, and could increase demand for carbon credits as greater scrutiny puts pressure on companies to reduce or offset their emissions.

"From April 6, 2022, over 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis – in line with recommendations from the Task Force on Climate-Related Financial Disclosures," the UK's Department for Business, Energy and Industry strategy said in a statement Oct. 29.

The rules will cover many of the UK's largest traded companies, banks and insurers, as well as private companies with over 500 employees and GBP500 million ($685 million) in turnover, BEIS said.

The TCFD is an industry-led group which helps investors understand their financial exposure to climate risk and works with companies to disclose information in a clear and consistent way.

The group was launched at the Paris COP21 in 2015 by the Financial Stability Board and UN Special Envoy on Climate Action and Finance Mark Carney, who is also the UK's Finance Advisor for the COP26 summit.

"Our decision to require mandatory disclosures comes ahead of the G20 and COP26 summits, and it will increase the quantity and quality of climate-related reporting across the UK business community, including among some of the most economically and environmentally significant companies," BEIS said.

The legislation will take effect in April 2022, subject to parliamentary approval, it said.