FCA updates its Primary Market Technical Note on ESG disclosures

The Financial Conduct Authority (FCA) has updated its Primary Market Technical Note 801.2 on climate change and other ESG-related disclosures, to reflect the new rule and associated guidance on enhancing climate-related disclosures by standard listed companies as set out in policy statement PS21/23.

Under the Listing Rules (the LRs), listed issuers, issuers with securities admitted to trading on regulated markets, and those in scope of the requirements in the Market Abuse Regulation (MAR) and the Prospectus Regulation (PR) are subject to multiple disclosure requirements. These help ensure shareholders, investors and markets can make informed decisions. Since climate change (and other ESG) risks and opportunities are generally considered to be financially material to many issuers’ assets, they may need to be disclosed.

More generally, the LRs and PR impose disclosure obligations when an issuer’s securities are offered to the public, first listed or admitted to trading on a regulated market. The LRs, Disclosure Guidance and Transparency Rules, and MAR also give rise to disclosure obligations on an ongoing basis (i) in relation to announcements and financial reporting; and (ii) on an event-driven basis, since issuers must inform the public of relevant inside information as soon as possible.

In practice, this means taking steps such as:

• ensuring listed companies have adequate procedures, systems and controls in place to enable them to comply with their obligations in a timely and accurate manner (per guidance in LR 7.2.2G);
• including risk factors in a prospectus to ensure investors can make an informed assessment of such risks and therefore take investment decisions in full knowledge of the facts; and
• ensuring that inside information is made public in a manner which enables fast access and complete, correct and timely assessment of the information by the public.

The note picks out climate disclosures in particular as an area of focus, but it is important to think about the range of ESG factors that may be relevant and to consider the extent to which current events, like the Russian-Ukraine conflict, may drive the need for further disclosures.