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During last year’s COP26, the UK Government announced that it would mandate the disclosure of listed companies’ and financial institutions’ net zero transition plan, and that it would form a taskforce to assist private sector actors in doing so.

Coinciding with the start of COP27, the UK’s Transition Plan Taskforce (“TPT”) – a taskforce with a mandate from His Majesty’s Treasury to help enable private sector actors in the UK create robust climate transition plans to fulfil their net zero commitments – on 8 November 2022, published, for consultation, its new Disclosure Framework for companies to disclose their climate transition plans.

Importantly, the Disclosure Framework draws on existing and emerging disclosure regimes, such as the Taskforce on Climate-Related Financial Disclosure (“TCFD”) Recommendations and the International Sustainability Standards Board’s (“ISSB”) Sustainability Disclosure Standards (for more information on the TCFD and ISSB regimes, read our previous blog posts here, here, here and here).

The TPT’s publication of its Disclosure Framework recommendations is supplemented by the TPT’s Implementation Guidance. The Implementation Guidance sets out practical steps to help private sector actors develop climate transition plans, as well as information on when, where and how to disclose such plans.…

Continue Reading Climate Disclosure: the UK’s Transition Plan Taskforce launches ‘gold standard’ for climate transition plans

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The UK’s financial regulator – the Financial Conduct Authority (“FCA“) – on 25 October 2022, published its “Sustainability Disclosure Requirements (“SDR“) and investments labels” Consultation Paper (CP 22/20) (the “Consultation Paper“).

This follows the FCA’s July 2021 “Dear AFM Chair” letter regarding improving the quality and clarity of authorised…

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To help companies improve their reporting on net zero commitments, the FRC Lab have published its Net zero disclosures report (“the Report”), which provides companies with practical tips and questions to consider when preparing disclosures in their financial reports on net zero and other Greenhouse Gas (“GHG“) reduction commitments.…

Continue Reading The UK’s Financial Reporting Council publishes guidance to assist companies reporting on their net zero commitments

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Investors across the globe are increasingly putting pressure on legislators to mandate human rights and environmental due diligence (“HREDD“). The UK Government has not been immune from such pressure.

As highlighted in our earlier blog post, in early September 2022, a group of 47 companies, investors, business associations and initiatives operating in…

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The expectation for businesses to conduct human rights and environmental due diligence (“HREDD“) is increasingly becoming mandated by legislators across the globe.  As discussed in our earlier blog post, mandatory HREDD obligations are already in-place across Europe, including in France, Germany and Norway, whilst the EU is expected to adopt the draft Corporate Sustainability and Due Diligence Directive – which sets out a proposed mandatory HREDD standard – in 2023. Although the UK Government has announced its intention to introduce a new Modern Slavery Bill (see pages 83 to 84 of the Queen’s Speech briefing, published on 10 May 2022), the UK Government has not indicated that it intends to follow Europe’s lead in introducing a UK-level mandatory HREDD law.

As a result, in September 2022, 47 companies, investors, business associations and initiatives operating in the UK published a joint statement calling on the UK Government to “introduce a new legal requirement for companies and investors to carry out human rights and environmental due diligence“. This follows calls, in August 2022, from a group of 39 investors for the UK Government to bring forward a ‘Business, Human Rights and Environment Act’ to mandate all companies operating in the UK to conduct HREDD.…

Continue Reading Business and Human rights: Investors call on the UK Government to mandate human rights and environmental due diligence

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Investors are increasingly focussed on how companies address modern slavery and wider human rights issues when making investment decisions.  Despite this, many UK companies are failing to adequately report on, and take sufficient steps to eradicate, modern slavery within their businesses and supply chains, according to the Financial Reporting Council’s (the “FRC“) recently published Modern Slavery Reporting Practices in the UK Report (the “Report”).

The Report, which analysed the reporting practices of 100 companies listed on the London Stock Exchange’s Main Market, highlighted that the majority of companies are failing to disclose sufficient information to enable stakeholders to make informed decisions about companies’ compliance with modern slavery legislation.  Such shortcomings in the quality of companies’ modern slavery reporting presents a number of compliance, reputational and financial risks to companies.…

Continue Reading Business and Human Rights: the Financial Reporting Council identifies failings in UK companies’ modern slavery reporting

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Many UK companies will soon be mandated to make TCFD-aligned disclosures. This follows the Financial Conduct Authority’s (FCA) introduction of the Listing Rules (Disclosure of Climate-Related Financial Information) Instrument in December 2020, which requires companies with a UK premium listing to disclose on a comply-or-explain basis against the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in their annual reports. The FCA and UK Government have held consultations on extending this requirement to standard-listed and large private companies.

To help companies comply with these disclosure requirements, the Financial Reporting Council’s Financial Reporting Lab (the ‘Lab‘) has recently published a ‘TCFD: ahead of mandatory reporting’ report (the ‘Report‘), which provides examples of good disclosure practices by companies that have already voluntarily adopted the TCFD framework. The Report refers to research recently conducted by the Alliance Manchester Business School on the approaches companies have taken to conducting climate-related scenario analysis (the ‘Research‘), which is required in order to comply with the TCFD recommendations. Together, the Report and the Research provide holistic practical advice for companies on making TCFD-aligned disclosures, which is also relevant for non UK based companies who are considering how best to address the TCFD recommendations.…

Continue Reading TCFD: Preparing for Mandatory Reporting

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In a significant development in the UK government’s drive towards “greening” the financial system, as part of the transition to a net zero carbon economy, HM Treasury published, on 18 October 2021, a policy paper entitled “Greening Finance: A Roadmap to Sustainable Investing” (the “Roadmap“).  The Government’s Green Finance Strategy envisages three phases:

  1. Informing investors and consumers: Ensuring that decision-useful information on sustainability is available to financial decision-makers;
  2. Acting on the information: Mainstreaming sustainability considerations into business and financial decisions; and
  3. Shifting financial flows: Shifting capital to align with a net zero and nature positive economy.

The Roadmap focusses on delivering the first phase through the introduction of economy-wide Sustainable Disclosure Requirements (SDRs).  The SDRs aim to bring together existing and new sustainability disclosure requirements under one integrated framework for corporates, asset managers and asset owners, and creators of investment products.

But what obligations will these organisations be subject to under the new SDRs, and how can they best prepare themselves to comply with such obligations?…

Continue Reading HM Treasury Publishes Its UK Sustainable Finance Roadmap

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As interest in, and demand for, sustainable goods and services continue to increase rapidly, so too has the volume of statements, assertions and claims, often in the context of advertising, regarding the sustainability credentials of those goods and services.

In a further sign of the continued trend towards stricter regulation, and enforcement, in the context of so-called “greenwashing”, the UK’s Competition and Markets Authority (CMA) recently published its “Green Claims Code” (the “Code“), a guidance note for businesses on making environmental claims when advertising goods and services in the UK.…

Continue Reading The UK’s CMA Publishes Guidance on Environmental Claims Used in Advertising

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On 8 April 2021, we discussed in our blog post the UK government’s consultation on the draft climate risk regulations under the Pension Schemes Act 2021. The government has recently published a response to the draft regulations, the finalised regulations and the accompanying statutory guidance. The new regulations will apply to trustees of larger…