Impact of Climate-related Financial Disclosures for Large UK businesses

Following the 2017 recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) framework, the former Department for Business, Energy and Industrial Strategy introduced new regulations during 2022. How do these impact UK companies?

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Published: 31 May 2023 Updated: 31 May 2023

The TCFD, established in 2015 by the Financial Stability Board, was tasked with reviewing how the global financial sector could take account of and disclose climate-related issues.  In 2017, the TCFD published a report which set out the core elements of recommended climate-related financial disclosures that apply to organisations across sectors and jurisdictions. It is already mandatory for entities with a premium or standard listing on the main market of the London Stock Exchange   to report in accordance with the TCFD framework.

Focusing on the UK, many organisations already provide some level of voluntary climate-related disclosure in their annual reports.  To support better information and consistency, the former Department for Business, Energy and Industrial Strategy (BEIS) introduced The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 (together ‘the Regulations’) in the UK, which are based on the TCFD recommendations to help support informed investor decisions. We explore some frequently asked questions on how this will impact UK companies and LLPs.

Which UK companies are impacted by The Companies (Strategic Report) and Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022?

  1. AIM-listed UK companies and groups with over 500 employees
  2. UK companies and LLPs or groups headed by UK companies and LLPs with:
  • More than 500 employees; and
  • More than £500 million aggregate consolidated turnover


There are other types of entities for which reporting on TCFD is also mandatory. This includes Premium listed companies, standard listed companies, FCA regulated asset managers/life insurers/pension providers and entities currently qualifying as public interest entities (PIEs)

What is the scope of reporting requirements in Group situations?

  • For UK registered parent companies that do not prepare group accounts, the scope criteria must be applied to the aggregated turnover and employee figures of the group headed by that parent, in such situations, the climate-related financial disclosures should relate to the parent company, including how climate-related risks and opportunities may affect that value of the investment in subsidiaries.
  • Subsidiaries whose activities are consolidated within the group accounts of a UK parent that has complied are not required to report separately. However, subsidiaries whose activities are not consolidated must comply individually, if the scope criteria are met.
  • UK parent companies that prepare group accounts must comply with the regulations for the group headed by the parent, including overseas subsidiaries.
  • UK companies with an overseas parent must consider the scope criteria based on their individual (or aggregated if a parent) turnover and employee figures – even if the overseas parent produces group TCFD disclosures.

What information should UK companies disclose within the new regulations?

UK companies and LLPs within the scope of the new regulations are required to disclose information in relation to climate-related matters by reference to four pillars:


Description of a company's governance arrangements in relation to assessing and managing climate-related risks and opportunities


Description of:

-Principal climate-related risks & opportunities arising in connection with company’s operations and time periods by reference to which those risks & opportunities are assessed

-Actual and potential impacts of the principal climate-related risks & opportunities on company’s business model and strategy

-Resilience of the company’s business model and strategy, taking into consideration different climate-related scenarios

Risk management

Description of:

-How the company identifies, assesses and manages climate-related risks and opportunities

-How processes for identifying, assessing and managing climate-related risks are integrated into company’s overall risk management processes

Metrics and targets

Description of:

-Key performance indicators (KPIs) used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and of the calculations on which those KPIs are based

-Targets used by the company to manage climate-related risks and to realise climate-related opportunities and of performance against these targets

The disclosures required are based on the TCFD recommendations, adapted to ensure the language and format of the content is suitable for UK legislation.

Where should UK companies & LLPs report climate-related financial disclosures?

Companies and LLPs must include the climate-related financial disclosures in the Non-Financial and Sustainability Information Statement For LLPs that do not produce a Strategic Report, they must include the climate-related financial disclosures in the Energy and Carbon Report instead.

When are the new disclosure requirements applicable?

The requirements are applicable to periods beginning on or after 6 April 2022.

Other upcoming regulatory changes – Sustainability Disclosure Requirements (SDR) and transition plans

In October 2021, the UK Treasury published the ‘Greening Finance: A Roadmap to Sustainable Investing’ which outlines the UK Government’s plans to make TCFD-aligned disclosures fully mandatory across the UK economy by 2025 under the forthcoming ‘Sustainability Disclosure Requirements (SDR)’. This includes the need to publish transition plans underlying the net-zero ambitions. While transition plans are not mandatory in current regulations, we expect that most large businesses will be required to disclose these plans with regular ongoing updates.

How can Evelyn Partners help?

To date, entities may have been providing voluntary disclosures. Full compliance with the new requirements requires significant work, and a fundamental shift in how boards consider the impact on strategy, risk and how they develop measures to monitor performance.

We can help:

  • Provide training to management on the changing requirements
  • Work with stakeholders to identify key climate-related risks and opportunities
  • Conduct scenario analysis to identify how key risks and opportunities may reveal themselves over time
  • Help to identify appropriate metrics and targets
  • Assist with the collection of data and setting up processes for ongoing reporting
  • Assisting with setting up appropriate governance structures and policies and procedures
  • Provide recommendations on climate-related disclosures
  • Benchmark TCFD disclosure to peers
  • Preparing transition plans aligned to TCFD and Transition Plan Taskforce (TPT) recommendations

Get in touch with our experts to find out how we can help.