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| 5 minutes read

TCFD Reporting: How are premium listed companies doing?

The FRC and FCA recently published two reports assessing whether premium-listed companies’ climate-related reporting had materially improved following the FCA’s introduction of a ‘comply-or-explain’ requirement to disclose against the TCFD Recommendations and Recommended Disclosures.[1] 

Under the UK Listing Rules, for accounting periods starting on or after 1 January 2021, companies with a premium listing are required to include a statement in their annual financial report setting out, for example, whether they have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures.[2] FY2022 is, therefore, the first reporting year where the effects of the new requirement are being seen.


TCFD Recommendations and Recommended Disclosures – Source:

The FRC found that the companies reviewed had “generally risen to the challenge” and similarly the FCA notes that it was “encouraged by the overall improvement in the completeness and consistency of disclosures with the TCFD framework following our regulatory intervention”. However, both reports identify areas for improvement. Specifically, the FRC’s report outlines what its expectations are and provides examples of better practice, which companies may look to in refining their disclosures.

Below is a summary of the main points arising from each report.

FRC Report 

The FRC identifies five areas where the companies included in its report could improve their TCFD disclosures:

  1. Granularity and specificity: the FRC identifies a number of areas that lacked detail. For example, it found that detail was more limited around:
    • The potential different impacts of climate change according to the different businesses, sectors and geographies in which a company operates; and
    • Scenario analysis – for example, the report identifies fewer disclosures around why specific scenarios were chosen, underlying assumptions and how the analysis was undertaken.
  2. Balance: the report finds that there was sometimes an imbalance between the discussion around climate risk and opportunities, with an undue emphasis on the former.
  3. Interlinkage with other narrative disclosures: the report identifies a number of examples where TCFD disclosures were not well integrated within other aspects of companies’ narrative reporting. For example, it finds that how identified risks and opportunities impacted on business strategy and financial planning and how climate-related scenarios informed strategy and financial planning was often unclear.
  4. Materiality: the FRC identifies a number of instances where it wasn’t clear how companies had applied materiality to their TCFD disclosures. For example, the report finds that companies did not outline how they had considered the TCFD all-sector guidance and supplemental guidance for financial and non-financial companies[3] and, where elements from the guidance were not addressed, whether this was because they had been considered not material or for other reasons, such as lack of data.
  5. Connectivity between TCFD and financial statements: the number of companies referring to climate change in their financial statement increased significantly over the past year – 22 out of 25 companies, up from 6 out of the 24 companies included in the FRC’s previous 2020 review period. However, the discussion of the impact of climate on the financial statements was often generic. The FRC underlines that it expects the connectivity between the two to be considered and notes that it may challenge companies who identify significant climate risks or net zero transition plans in their reporting, but who do not adequately explain how these have been considered when preparing their non-financial statements.

FCA Report

The FCA encouragingly notes a significant increase in companies making disclosures that were either partially or mostly consistent with the TCFD framework compared with 2020. It did find that reporting gaps remain and that the most common gaps “were in respect of the more quantitative elements of the TCFD’s recommendations eg scenario analysis and metrics and targets”.


  • The journey has just begun: It is encouraging to see the progress made to date. However, as companies continue to familiarise themselves with TCFD reporting, the level of scrutiny on the quality of those disclosures will continue to heighten. Engaging with third party materials such as the FRC and FCA Reports can help to pinpoint where the gaps lie and understand how to address them. The pressure will inevitably increase:
    1. Firstly, as in-scope standard listed companies will also be subject to the TCFD Listing Rule requirement for accounting periods starting on or after 1 January 2022[4]; and
    2. Secondly, in light of the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (“CFD Regulations”)[5], which are applicable for accounting periods beginning on or after 6 April 2022. Under the CFD Regulations:
      • the scope of companies that will be required to make climate related financial disclosures increases – these disclosures are broadly in line with the four overarching pillars of the TCFD recommendations; and
      • the required disclosures will be on a mandatory basis, as opposed to on a ‘comply or explain’ basis (as is the case under the Listing Rules regime).
  • Opportunity, not tick-boxing exercise: When addressing TCFD reporting, companies should be mindful that the content of their TCFD disclosures is not the only important factor – they should also focus on the action that occurs throughout the rest of the year, which informs those disclosures and ultimately can help improve their quality. TCFD disclosures should not be interpreted as a mere tick-boxing exercise. Instead, they should be welcomed as an opportunity to consider, pivot and re-set a company’s strategy and help improve decision making in relation to climate risk.
  • Important to have an eye on what’s next: Discussions are increasingly beyond climate. Nature, biodiversity and wider sustainability-related issues are creeping into the spotlight, with the Taskforce on Nature-Related Financial Disclosures (“TNFD”) framework and International Sustainability Standards Board (“ISSB”) standards currently in progress. Whilst both are still at the draft stages, companies would benefit from front-loading any analyses of the impacts they may have, particularly as the UK Government has indicated that it will implement the ISSB standards and it is likely that it will do the same with the TNFD framework. Those companies already familiar with the TCFD framework, will be well placed to engage with these new frameworks, as both the TNFD and ISSB are currently intended to follow the four-pillar TCFD structure.

[1]The FRC reviewed TCFD disclosures and climate-related reporting in the financial statements of 25 premium-listed companies in sectors that are potentially most exposed to climate change. The FCA combined quantitative analysis of 171 premium listed companies’ TCFD disclosures and a more targeted qualitative analysis of the disclosures of 31 of those companies.

[2] LR 9.8.6R(8) for UK registered companies and LR 9.8.7R for overseas companies.  

[3] LR 9.8.6BG requires companies to perform a detailed assessment of their disclosures, taking into account the TCFD all-sector guidance, as well as (where appropriate) the supplemental guidance for the financial sector and for non-financial groups in certain industries.

[4] LR 14.3.27R applies to companies with a standard listing of shares and standard listed issuers of global depositary receipts (in each case, other than investment entities or shell companies).  

[5] The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (


reporting, tcfd, risk, climate change