The UK’s Financial Reporting Council has announced a wide-ranging review of companies’ climate change disclosures. Environmental lawyers at ClientEarth, who have previously flagged these issues to the regulator and called for stronger oversight have welcomed the move and called for swift, strong enforcement action for laggard companies.
ClientEarth lawyer Daniel Wiseman said: “Oversight of climate risk by the FRC and FCA has historically been poor, even in the face of glaring climate reporting failures we have flagged to both regulators. Climate change poses critical risks to companies, and systemic risks to the wider economy, and regulators have been asleep at the wheel on both counts. This long overdue review must lead to strong enforcement action.
“The FRC’s review will focus on climate disclosure – but while this is vital, it is no longer good enough on its own. We need urgent attention on what companies are actually doing in the real world and whether it squares with global climate imperatives. Companies that continue with climate-destructive behaviours are planning their own demise. A 4C global temperature rise is no climate to do business in and it is in companies’, auditors’ and regulators’ own interest to work to avert this scenario.
“There is a rapidly developing expectation from investors and governments that business models and plans align with the Paris Agreement and this perspective must inform the FRC’s review and subsequent actions.”
Read about ClientEarth’s previous complaints to the FRC and FCA
Read ClientEarth’s December briefing: “UK financial regulators are missing in action on company failures to disclose material climate-related information”
ClientEarth lawyer Stephanie Morton in BusinessGreen: “On climate risk, financial regulators are leaving us exposed to a devastating crisis”