The Department of Business, Energy and Industrial and Strategy (BEIS) has published non-binding Guidance to help entities comply with new regulations that require certain companies and LLPs to include climate-related financial disclosures in their annual report.

The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/31) and the Limited Liability Partnerships (Climate-related Financial Disclosures) Regulations 2022 (SI 2022/46) come into force on 6 April 2022 and apply to accounting periods starting on or after that date (see our briefing on the regulations for more information).

In the Guidance, BEIS addresses a number of FAQs on the requirements, including:

  • how to apply the size thresholds that determine which entities are in scope;
  • how the requirements operate in a group context; and
  • the consequences of non-compliance.

It also includes a list of other guidance which entities may find helpful when considering their climate-related financial disclosures.

A significant part of the BEIS Guidance considers what information companies and LLPs should disclose in order to comply with the different elements of the reporting requirement. One element that BEIS acknowledges may be unfamiliar is the scenario analysis, where entities have to consider the resilience of their business model and strategy in the context of relevant climate change scenarios. The Task Force on Climate Related Disclosures (TCFD) has published guidance on scenario analysis, which entities may also wish to review when conducting the analysis.

The BEIS Guidance also addresses the overlap between these reporting requirements and other climate and sustainability disclosure requirements, in particular the Listing Rule requirements to report against the TCFD Recommendations and Recommended Disclosures on a "comply or explain" basis (see our briefing on these requirements). Whilst the requirements under the Listing Rules and the regulations are broadly similar, there are areas of difference. The guidance notes that where a UK listed company is subject to both sets of requirements, disclosure in a manner consistent with all of the TCFD Recommendations and Recommended Disclosures for the purposes of the Listing Rules is "likely to involve use of similar information to the disclosures required by these regulations; therefore, it is normally likely to meet the requirements of these regulations."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.