FRC work on ESG and Climate related reporting

FRC work on ESG and Climate related reporting

Support For Companies To Report On Climate Considerations / Impact  

Climate Thematic

The FRC’s Climate Thematic Review  addresses the increasingly urgent issue of companies being held to account for the way in which they report their impact on climate. The report highlights current market practice, outlines our expectations of all reporting entities for the future, as well as investors and auditors, and where we will focus work on this key topic in the future.

FRC Statement of Intent on Environmental, Social and Governance challenges 

The ESG statement of intent and a SASB snapshot build on the FRC’s commitment to supporting TCFD and SASB reporting in the UK and show that whilst much good work has happened, there is more to do. There is more information here on how the statement lays out some challenges for ESG information and commits the FRC to further actions.

Staff Factsheet – FRC 102

The FRC have produced a Staff Factsheet on how climate considerations should be taken into account in preparing financial statements in accordance with FRS 102. It also includes information on the relevant narrative reporting, as the two need to be considered together. 

FRC Lab Call For Participants - ESG Data 

Investors and other stakeholders are increasingly interested in disclosures on the environmental and social impact of companies’ activities and their governance arrangements. As explained in the FRC’s statement of intent on ESG challenges, the data and systems underlying such disclosures pose challenges. The Financial Reporting Lab (Lab) is inviting companies, service and systems providers, investors and other interested parties to participate in a new project looking at how companies produce ESG data. Contact the Lab at by 15 November 2021 if you are interested in taking part.

FRC Corporate Reporting Reviews 

Corporate Reporting Annual Review

The Corporate Reporting Annual review highlights findings on climate change reporting found through the FRC’s routine reviews as well as thematic reviews such as the Streamlined Energy and Carbon Reporting Thematic (reference above). The FRC expect to see material climate change policies, risks and uncertainties discussed in narrative reporting and appropriately considered and disclosed in the financial statements, particularly where investors may reasonably expect a significant impact on the expected life or fair value of an asset or liability.

Streamlined Energy and Carbon Reporting Thematic

The Corporate Reporting Review Team’s Streamlined Energy and Carbon Reporting (SECR) Thematic Review  considered how a sample of companies and Limited Liability Partnerships (LLPs) had complied with new requirements for disclosures on emissions, energy consumption and related matters which came into effect from 1 April 2019. The report set out the FRC’s findings, identified examples of emerging good practice and outlined its expectations for future reporting. The review found that while the sample of reports largely complied with the minimum statutory disclosure requirements for emissions and energy consumption, more needs to be done to make these disclosures understandable and relevant for users.

Practical Advice For TCFD Reporting Requirements 

Premium listed companies will this year need to report against the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations on a comply or explain basis in their annual reports, with other companies following in future years. 

Taskforce on Climate related financial Disclosures: ahead of mandatory reporting

The Financial Reporting Lab (the Lab) has published a report in advance of these requirements to help companies prepare for mandatory TCFD reporting.  It includes practical advice and examples that better address aspects of TCFD reporting from those companies already adopting the framework on a voluntary basis.  Alongside the report, the Lab has also published a snapshot of the status of current reporting against the TCFD framework in the UK which highlights the increased uptake in the last year. (not published yet)

Climate Scenarios: Current practice and disclosure trends 

Scenario analysis is a vital tool for decision-makers as they assess uncertain futures and features prominently in the Taskforce on Climate-related Financial Disclosures (TCFD) Recommendations. The FRC commissioned Alliance Manchester Business School to investigate climate-related scenario analysis in more detail to assess and understand the current practice of FTSE 350 companies using scenario analysis.  The research highlights the various approaches companies have adopted, instances of good practice, typical challenges faced, and the common steps taken to conduct the analysis.  (Not published yet)

Guidance For Actuaries 

Joint Forum on Actuarial Regulation announces Climate Change Deep Dive

The Joint Forum on Actuarial Regulation (JFAR –  which comprises of the Financial Reporting Council, the Institute and Faculty of Actuaries, the Financial Conduct Authority, the Pensions Regulator and the Prudential Regulation Authority), has approved the formation of a task force to investigate, report, and publish a deep dive on the science of climate change. This will drive greater actuarial engagement on climate change in all aspects of actuarial work. Publication is planned for the second quarter of 2022.



The Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) have today announced a series of actions to ensure that information continues to flow to investors and to support the continued functioning of the UK’s capital markets.  
The FRC has published guidance for companies preparing financial statements and a bulletin for auditors covering factors to be taken into account when carrying out audits during the current Covid-19 crisis.     
The guidance for companies highlights the need to agree new working practices if the usual forms of management and control are disrupted, and reminds Boards of the detailed consideration they need to give to capital maintenance.  It addresses the difficulties companies currently face in making forward-looking judgements in their financial statements: for example, in strategic reports and viability statements, with a focus on appropriate disclosure of material uncertainties and going concern issues.    
The bulletin reminds auditors that they must obtain sufficient, appropriate audit evidence to support their audit opinion. However, in the current circumstances, they will need to consider the use of alternative procedures, including remote working and technology to obtain that evidence. This will not work in all circumstances and it is likely that there will be more modified opinions arising from the impact of COVID-19 on businesses.
In response to the unprecedented challenges raised by the crisis, the FRC will, where possible, delay or extend the deadlines for consultations; it has paused for at least a month writing to companies following its review of their annual reports and accounts; it is considering how it can adjust its audit quality review work to reduce demands on audit firms; and it will pause for at least a month requests to firms on supervisory initiatives, such as operational separation of audit practices.

David Rule, Executive Director of Supervision at the FRC, said:
“The current Covid-19 pandemic presents very real difficulties to companies and their auditors.  The package of measures today is designed to give both the ability to consider the impact of Covid-19 more comprehensively in the light of government and other responses and provide markets and investors with the information they need to make informed decisions.  
“The FRC is monitoring developments closely and maintaining frequent and regular contact with audit firms and other regulators. We will update our guidance as and when necessary, and withdraw these special measures when circumstances return to normal.”

A link to the company guidance can be viewed here
A link to the audit bulletin can be viewed here
A link to the joint regulators statement can be viewed here

Consolidated guidance for auditors (December 2020) 
The FRC has now consolidated its covid guidance for auditors which supersedes all previous guidance. 

Measures in respect of Company filings, AGMs and other general meetings during Covid-19 
Measures in respect of Company filings, AGMs and other general meetings during Covid-19 On 28 March 2020, the Secretary of State for Business Energy and Industrial Strategy, Alok Sharma MP, announced that the Government would, as soon as possible, bring forward legislation to assist those companies for which COVID-19 restrictions make it difficult to meet statutory obligations to hold meetings and to file documentation on the Companies Register. Those measures are being developed urgently. The following Q&A is designed to provide companies with additional information upon which to plan activities over the coming months.(17 April)

AGM's & COVID-19   Guidance on how to arrange and conduct AGMs in light of Covid-19 has been published by ICSA (The Chartered Governance Institute) in conjunction with the FRC and Slaughter & May. (9 April)(Revised) 

Corporate Reporting Moratorium The Financial Conduct Authority (FCA) has requested that all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks. The Financial Reporting Council (FRC) has worked closely with the FCA and other regulatory bodies over the past few weeks and fully supports the FCA’s request. (23 March)

Extended Filing Guidance 
Updated advice on company accounts filing (19 March)

AGM's & COVID-19  
Guidance on how to arrange and conduct AGMs in light of Covid-19 has been published by ICSA (The Chartered Governance Institute) in conjunction with the FRC and Slaughter & May.
(18 March)

Consolidated guidance for companies and investors (December 2020) 
The FRC has now consolidated all covid guidance for companies and investors which supersedes previous guidance. 









EU Technical Expert Group (TEG) on Sustainable Finance














Other resources


Accountancy Europe