Extension of Environmental Transparency to U.K. Standard Listed Companies – JD Supra

dWeb.News Article from Daniel Webster dWeb.News

[co-author: Callum James]

On November 15, 2021, the U.K.’s Financial Conduct Authority (FCA) moved to progress the British government’s aim of making the U.K. the world’s “first net zero-aligned financial centre” by publishing Primary Market Bulletin 36 (PMB 36). PMB 36 has confirmed regulatory progress towards expanding climate- and environmental-focused transparency requirements for all companies that have a standard listing equity shares. Here, we will examine the background to PMB 36, the changes it considers, and the FCA’s indications as to how these changes will be enforced.


PMB 36 comes after the FCA announced its new environmental, social and governance (ESG) strategy at COP 26, which included as one of its key actions the need to “enhance climate-related financial disclosures.” Before that, the FCA had already introduced “comply or explain” requirements relating to the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD) for premium–but not standard–listed U.K. companies in Listing Rule 9.8.6R(8). These disclosures were made for premium-listed companies in financial years starting on January 1, . This means that we will be seeing the first relevant full-year disclosures in the 2022 reporting cycles.

In June 2021, the FCA produced a consultation paper expressing an intention to broaden the scope of the existing disclosure requirements beyond Listing Rule 9.8.6R(8) to most issuers of standard listed equity shares (excluding investment entities and shell companies).

PMB 36

In PMB 36, the FCA summarizes the level of transparency that such standard listed companies will be expected to comply with. Fundamentally, it involves extending the “comply or explain” requirements applicable to premium listed equity issuers relating to TCFD recommendations to the relevant standard listed issuers under a proposed Listing Rule 14.3.27R. R.

The Financial Reporting Council (FRC) will have primary responsibility for compliance. This is the existing body that oversees compliance of listed companies with accounting obligations. As part of their ongoing accounting review process, the FRC will also consider compliance with TCFD disclosures. The FRC will encourage issuers, in the initial implementation period, to correct minor and technical violations to comply with new rules through corrections to subsequent reports and without further disclosure. The FCA may be notified of more serious violations.

If there is no TCFD-related information in an annual report, the issuer must promptly make the announcement through a Regulatory Information Provider. Failure to comply will almost certainly lead to more severe regulatory intervention or penalties.

Commencement and Enforcement

It is expected that proposed Listing Rule 14.3. 27R will apply for financial years for relevant standard listed companies beginning on or after January 1, 2022, so that the first relevant full year disclosures will be made as part of the 2023 reporting cycle.

The FCA has the power to fine and censure directors and listed companies if they violate FCA-enforced regulations. A suspension of securities listing can be imposed for serious breaches.


The FCA is due to publish a technical note elaborating on the content of PMB 36. It is evident that the extension of TCFD related disclosures is on track. Standard listed companies should assess the new requirements if not already and then implement processes to comply with the new disclosure rules. Similar disclosure rules will likely be extended to non-listed U.K. businesses, investment entities, and asset managers.

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