The UK government recently revealed that it will implement new reporting requirements for certain businesses in 2022. Here’s what you need to know about them, and what they will mean for your business.
The UK has announced that from April 2022 it will be a legal requirement for large companies and financial institutions to begin reporting on their climate-related financial disclosures. This announcement has arrived just before the UK hosts COP26 in Glasgow (read more about COP26 here), and will be a crucial part of the pathway towards the UK’s 2050 Net-Zero commitments.
The UK is the first G20 country to set in motion plans to mandate the disclosure of Task Force on Climate-related Financial Disclosures (TCFD) recommended climate-related risks and opportunities by large businesses, which gives UK businesses early insight into the rollout of potential future climate-related disclosures.
The new reporting standards align with the TCFD recommendations. The TCFD was created at COP21 in 2015 (learn more about COP21 and its outcomes here), and its aim is to facilitate economic stability through climate-aware financial decisions.
With this aim at their core, the TCFD recommendations outlined 4 focus areas, from which the standards were developed. For each of these 4 areas, companies are required to describe:
Requiring management and board roles to complete climate-related risk/opportunity assessments.
Embedding of short-, medium- and long-term climate-related risks and opportunities in business strategy and financial planning.
Integrated Risk Management
Ensuring identification and management of climate-related risks, and integrating this into the organisation’s overall risk management.
Metrics and Targets
Quantifying climate-related risks and opportunities to enable performance tracking based on Scope 1, 2 and (if appropriate) 3 emissions and associated risks.
Finally, the new UK reporting standards will require quantitative scenario analysis, which helps demonstrate the resilience of an organisation’s strategy under potential future warming conditions.
For now, these new standards only apply to UK-registered companies trading on a UK-registered market that have over 500 employees, and also private companies with over 500 employees and £500 million in turnover.
For these businesses, the rigour of TCFD bring obvious benefits in risk management and climate preparation. However, we also see 3 areas that you should be preparing for:
Contact Altruistiq on email@example.com to see how we could help your company with reporting and creating a comprehensive GHG baseline so that you can sell more, spend less, and save time.
The increase in sustainability reporting requirements is a trend which we expect to continue in the future. This expansion could come in two forms:
Therefore, even if your business is not impacted today, there is an opportunity now to be prepared for the incoming non-financial reporting standards of the future, whatever the size of your business.
For feedback on this article or questions related to how your organisation should approach sustainable reporting, drop us a line at firstname.lastname@example.org.
Altruistiq is a sustainability SaaS and helps some of the world’s largest companies to sustainably sell more, spend less, and save time.
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