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QCA publications and policy updates

This section of the Directors’ Knowhow features all of the publications produced by the QCA and any relevant updates that have occurred over the last month.

QCA Sentiment Survey results

The H1 2022 Sentiment Survey has shown companies remain confident about the outlook for their own businesses and the economy but to a lesser extent than they were 6 months ago. Employment growth is also predicted to be slower.

The good news, on an expected increase in turnover growth is perhaps best viewed within the context of increased inflation so may not represent purely higher business performance. 

Please find the report here.

Reports, guides and regulation

This section features some of the key legislative/regulatory developments and changes, as well as any new reports or guidance issued by industry bodies or regulators, over the last month.

FCA Policy Statement on diversity and inclusion

In April, the FCA published its Policy Statement on its proposals to amend its Listing Rules in relation to diversity and inclusion on company boards and executive committees. The rules will require listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management. The idea behind implementing these new rules is to make it easier for investors to see the diversity of their senior leadership teams.

Companies will be required to include a statement in their annual financial report setting out, on a comply or explain basis, whether they have met specific board diversity targets. These targets are:

  • At least 40% of the board are women;
  • At least on of the senior board positions (Chair, Chief Executive Officer, Senior Independent Director, or Chief Financial Officer) is a woman; and
  • At least one member of the board is from a minority ethnic background (which is defined by reference to categories recommended by the Office for National Statistics (ONS)) excluding those listed, by the ONS, as coming from a White ethnic background).

Companies will also be required to set out in their statement:

  • The reference date used, and where this is different from the reference date used in respect of the previous accounting period, an explanation of why; and
  • any changes to the board that have occurred between the reference date and the date on which the annual financial report is approved that have affected the company’s ability to meet one or more of the targets.

Alongside the narrative disclosures, the FCA will require companies to publish numerical data on the sex or gender identity and ethnic diversity of their board, senior board positions and executive management in a table.

In terms of scope and timing, the rules apply to all UK and overseas Premium and Standard Listed companies with equity shares for financial accounting periods starting from 1 April 2022. The FCA has stated that a review of the rules will be conducted in three years’ time to ensure they are working, and that the diversity targets set are appropriate.

On the whole, the final rules are broadly similar to those that were consulted on, but some amendments have been made. These amendments have been detailed below:

  • For the numerical disclosures, companies can report on the basis of sex or gender identity.
  • For companies that have members of their board or executive committee overseas, with local law preventing them from collecting aspects of the data, a company can explain why they are unable to collect all the data.
  • Included a requirement for companies to explain their approach to collecting the data.
  • Changed the date of commencement from financial years starting on or after 1 January 2022 to 1 April 2022.
  • The FCA will also not extend the Listing Rule reporting requirements to representation on sexual orientation or other categories, such as lower socio-economic background, or to set requirements for the level below executive management.

To view the Policy Statement, please click here.

FRC report on modern slavery statements

On 25 April 2022, the FRC published a new research report on modern slavery statements. The report, which was produced in conjunction with the UK Anti-Slavery Commissioner, identified significant shortcomings in the quality of companies’ modern slavery reporting.

The research looked at a sample of 100 major companies’ modern slavery statements and their strategic and governance reports. The report found that one in ten companies do not provide a modern slavery statement despite it being a legal requirement. Where companies had complied, only one third of these were considered easy to understand. In particular, the use of key performance indicators used to measure the effectiveness of steps to minimise modern slavery were especially poor.

The review suggests that too many companies appear not to view human rights issues in their workforce and supply chain as a source of risk, and that modern slavery considerations are still not a significant concern for many boards. Given the modern slavery is an important element of the Social element of ESG, the findings of this research present an opportunity for companies to provide better information on the effectiveness of their policies.

To view the full report, please click here.

FRC on corporate purpose and ESG

At the beginning of April, the FRC released a short report on corporate purpose and ESG (Environmental, Social and Governance). The report is a follow up to the FRC’s report on creating positive culture. The report draws attention to some of the key observations, best practice and examples of the application identified in our research.

In terms of corporate purpose, the report covers:

  • Why corporate purpose should be considered – namely because it can help improve strategy, improve connections with workers, customers, suppliers and communities, boost innovation and access to capital, enhance long-term value and help to navigate social change.
  • How corporate purpose can be addressed in practice – corporate purpose can be addressed through considering: why the company exists; what the company does; in what market the company operates; what the company is seeking to achieve; how the company aims to achieve its goals.
  • When corporate purpose should be reviewed – a company’s corporate purpose should be amended when it is no longer reflective of the business model, operations and pursued strategy and should be changes to be realigned with the company’s core strategic objectives.

In terms of ESG, the report covers:

  • Why the link between culture, purpose and ESG is critical – ESG reporting requirements help to maintain the focus on culture, purpose and values, largely due to their direct link with the Social (S) element of ESG.
  • How to approach ESG objectives and commitments – Companies should regularly assess their ESG objectives and commitments, frame and embed them across the organisation through clear language, regular communication and measurable targets, and monitor and report on the impact on their stakeholders and achievement of goals.

To view the FRC’s report, please click here.

NS&I Act Guidance

On 11 April 2022, the Department for Business, Energy and Industrial Strategy (BEIS) published guidance on compliance and enforcement for the National Security and Investment (NS&I) Act 2021. The document explains how to comply with the Act and what to expect if you are subject to orders and notices under the Act. The guidance recommends that companies should seek independent legal advice to help comply with the obligations under the Act.

The guidance covers the following areas:

  • Notices and orders
  • Demonstrating compliance
  • Requesting a review, variation, or revocation of an interim or final order
  • Monitoring and verifying compliance
  • Enforcement
  • Appeals
  • Judicial review
  • Responsibility to prevent market abuse
  • Contacting the Investment Security Unit.

To view the guidance, please click here.

HM Treasury Transition Plan Taskforce launch

Towards the end of April, HM Treasury launched the UK Transition Plan Taskforce (TPT). The intention behind the TPT is to develop a gold standard for climate transition plans. The Taskforce will help to ensure that financial institutions and companies prepare plans to achieve net zero and support efforts to prevent greenwashing.

The TPT has a two-year mandate, and the FCA will be actively involved in the work of the Taskforce to potentially make changes to its disclosure rules. The TPT’s workstreams will cover three key topics:

  • A sector-neutral framework for private sector transition plans.
  • Sector-specific guidance for finance and real economy sectors.
  • Recommendations for companies and stakeholders on preparing and using transition plans, as well as a sandbox for plans.

To view the TPT’s website, please click here.

Auditor resignation statements

The Institute of Chartered Accountants in England and Wales (ICAEW) recently published guidance on auditor resignation statements. The guidance has been published in response to Sir Donald Brydon, who criticised the quality of these statements. The guidance is intended to be used to make these statements more informative and clear for stakeholders, with better and more meaningful information about why an auditor has been dismissed or resigned helping to improve the quality of audits.

The guidance also highlights requirements relating to the way resignation statements are presented and raises awareness of the need for audit firms to address auditor resignation and client acceptance considerations as part of their quality management systems.

To view the guidance in full, please click here.

FRC Stakeholder Insight Group

In April, the FRC published the terms of reference for its newly established Stakeholder Insight Group (SIG). The SIG, which will meet on a quarterly basis, represents companies, investors, audit committee chairs, and other key parts of the stakeholder universe.

The SIG has been set up to:

  • Share perspectives on key opportunities and potential areas of focus for the FRC;
  • Share perspectives on key areas of concern and emerging risks relating to accounting, reporting, auditing and governance issues;
  • Provide input on:

    • Auditing, Accounting and narrative reporting policy development, including proposed developments to international codes, standards and regulations as appropriate.
    • The UK Corporate Governance Code.
    • The UK Stewardship Code.
    • The FRC Annual Report and Accounts and its Strategy and Plan.
    • The FRC’s approach to ESG and Climate reporting.

  • Provide comment on regular enforcement and supervision activities; and
  • Consider and respond to requests for input and advice from the FRC relating to thematic reviews and other projects.

To view the terms of reference, please click here.

FCA Business Plan

At the beginning of April, the FCA published its business plan for 2022/23, which details the work the regulator intends to do over the next 12-month period. The Business Plan goes into detail on the FCA’s three key focusses, including:

  1. Reducing and preventing serious harm;
  2. Setting and testing higher standards; and
  3. Promoting competition and positive change.

To view the Business Plan, please click here.

Surveys, projects and questionnaires

This section features surveys or questionnaires submitted by industry bodies or regulators that are relevant to small and mid-size quoted companies.

QCA ESG survey

The QCA is currently working on an ESG project to help our members with their ESG practices and disclosures. As part of this project, we are launching a survey to establish a more comprehensive view of what our member companies’ perspectives on ESG are and to help us further understand the needs of our members so that we can assist them with their ESG-related disclosures and initiatives.

The survey is for QCA corporate members and should take approximately 10-15 minutes to complete.

We would be grateful for your participation.

To take the survey, please click here.


This section provides an update of any recently submitted QCA consultation responses, as well as the consultation responses the QCA is currently drafting.

Policy consultations seeking views:

The QCA is seeking views from members on the following consultations:

  1. ISSB: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (Deadline: 29 July 2022)

The International Sustainability Standards Board (ISSB), which was established at COP26, has published a consultation setting out general sustainability-related disclosure requirements. The proposals build upon the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and incorporate industry-based disclosure requirements derived from SASB Standards.

The proposals set out requirements for the disclosure of material information about a company’s sustainability-related risks and opportunities that are necessary for investors. The proposals include requirements and guidance to support the disclosure of material information about significant sustainability-related risks and opportunities.

  1. ISSB: IFRS S2 Climate-related Disclosures (Deadline: 29 July 2022)

The International Sustainability Standards Board (ISSB), which was established at COP26, has published a consultation setting out specifying climate-related disclosure requirements. The proposals build upon the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and incorporate industry-based disclosure requirements derived from SASB Standards.

The proposals from the ISSB set out the specific requirements for the identification, measurement and disclosure of climate-related financial information. The proposals would require a company to provide information in line with the TCFD on governance, strategy, risk management and metrics and targets to enable users to develop a greater understanding of the companies climate-related risks and opportunities.

If you have any comments you wish to contribute to the above consultation(s), please get in touch with Jack Marshall, Senior Policy Adviser,

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