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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.

Government to impose mandatory climate-related disclosures for largest AIM companies

Following its consultation on mandatory climate disclosures, the Department for Business, Energy and Industrial Strategy (BEIS) has published its feedback on the responses it received. As part of their response, the Government has confirmed that the UK will become the first G20 country to make it mandatory for the UK’s largest businesses to disclose their climate-related risk and opportunities in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.

The new legislation’s rules will come into force on 6 April 2022, meaning that 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis. This will include the UK’s largest traded companies, banks and insurers, as well as private companies with over 500 employees and over £500 million in turnover.

In terms of scope, the mandatory disclosure requirements will apply to:

  • All UK companies that are currently required to produce a non-financial information statement, being UK companies that have more than 500 employees and have either transferable securities admitted to trading on a UK regulated market, or are banking companies or insurance companies (Relevant Public Interest Entities (PIEs));
  • UK registered companies with securities admitted to AIM with more than 500 employees;
  • UK registered companies which are not included in the categories above, which have more than 500 employees and a turnover of more than £500m; and
  • LLPs which have more than 500 employees and a turnover of more than £500m.

In terms of the disclosure requirements themselves, a question was asked in the consultation whether requiring disclosure in line with the four pillars of the TCFD recommendations (Governance, Strategy, Risk Management, and Metrics and Target) was more suitable than at the 11-recommendation level. On that basis, BEIS proposed a disclosure requirement which broadly covered 9 of the 11 recommendations. This left two of the recommendations outstanding from the TCFD on scenario analysis and on emissions metrics.

However, BEIS has stated that, given the feedback received, qualitative scenario analysis would be an appropriate first step. The final regulations will, therefore, include a requirement for in-scope companies and LLPs to include an analysis of the resilience of the company’s business model and strategy, taking into account different climate-related scenarios. The Government also intends to issue guidance on this and clarify that a qualitative assessment of resilience against different scenarios will be sufficient to meet the obligation.

To view the feedback statement, please click here.

FCA Primary Markets Bulletin

On 15 November 2021, the FCA published its Primary Markets Bulletin (PMB) No 36 which sets out information on the FCA’s disclosure expectations and supervisory strategy in relation to the TCFD climate-related disclosure requirements for Premium Listed companies (and, subject to the making of final rules, for certain Standard Listed companies).

Guidance on the FCA’s disclosure expectations relating to the TCFD requirements is set out in a new technical note (available here). The technical note includes details of the FCA’s expectations where a listed company has not included climate-related financial disclosures consistent with all of the TCFD recommendations in its annual financial report or in another document.

The PMB also sets out the supervisory strategy. It states that the FCA is responsible for monitoring and enforcing compliance with the Listing Rule requirements and the FRC is responsible for keeping the disclosures under review. The review of TCFD-aligned disclosures will be embedded into the FRC’s routine reviews of annual financial reports. The FCA intends to collaborate with the FRC on thematic work to assess compliance, identify areas of concern and highlight examples of best practice.

To view the PMB, please click here.

Government plans to increase number of women at the top of UK businesses

The Government has announced its intentions to support a new five-year review aimed at increasing opportunities for women at the top of Britain’s biggest companies. The new review will follow the Hampton-Alexander Review that saw a 50% increase in women on FTSE boards in just 5 years. The review intends to monitor women’s representation in the upper rungs of FTSE companies and encourage firms to open up opportunities to everyone.

The Government has since launched an online portal for its “FTSE Women Leaders Review” for companies to submit their gender diversity data. New leadership is currently being reported to steer the review and take forward new targets over the coming years.

To find out more information on the announcement, please click here.

To view the FTSE Women Leaders Review portal, please click here.

CIIA report on climate change risk

The Chartered Institute of Internal Auditors (CIIA) has published a guide for audit committees and directors on harnessing internal audit against climate change risk.

The guide states that internal audit has an important role to play in managing the challenges and opportunities associated with climate change. The guide mentions that the internal audit function should focus on how the company is identifying, managing and mitigating the risk and opportunities of climate change, as well as commenting on and assessing the measures that the organisation has put in place to reduce its environmental impact.

The aim of the guide is twofold:

  • Firstly, to encourage senior leaders to make demands of and fully harness their internal audit teams in respect of climate change preparedness.
  • Secondly, to encourage internal audit professionals to be leaders in this space, stepping up to show their value and worth to the organisations they serve.

To view the guide, please click here.

FCA ESG strategy

At the beginning of November, the FCA announced its strategy for positive changes and its Environmental, Social and Governance (ESG) priorities. Their ESG strategy sets out the FCA’s target outcomes and the actions they expect to take to deliver these. The FCA’s work is based on five key themes:

  • Transparency – promoting transparency on climate change and wider sustainability along the value chain
  • Trust – building trust and integrity in ESG-labelled instruments, products and the supporting ecosystem
  • Tools – working with others to enhance industry capabilities and support firms’ management of climate-related and wider sustainability risks, opportunities and impacts
  • Transition – supporting the role of finance in delivering a market-led transition to a more sustainable economy
  • Team – developing strategies, organisational structures, resources and tools to support the integration of ESG into FCA activities.

To find out more information on the FCA’s strategy, please click here.

Government guidance on the NSA

In November, the Department for Business, Energy and Industrial Strategy (BEIS) published further guidance to help businesses understand their obligations under the new laws contained in the National Security and Investment (NSI) Act 2021. The NSI Act, which comes into force on 4 January 2022, gives the Government powers to scrutinise and intervene in business transactions, such as takeovers.

The guidance covers the mandatory notification regime under the NSI Act. The mandatory notification regime applies to acquisitions of control over qualifying entities that undertake certain activities in the UK within a specified high-risk sector. The new guidance sets out details of the nature of these activities for each of the specified high-risk sectors.

The initial guidance was published in July 2021. This updated version contains new information on submitting a notification; the review and assessment process; compliance and enforcement; and contacting the Investment Security Unit. This guidance aims to help companies:

  • Assess whether the Government must be notified of an acquisition, including if the entity is outside of the UK.
  • Understand what to expect when they submit a notification form and go through the NSI notification and assessment process. This covers retrospective validation applications as well as mandatory and voluntary notifications.

In addition to the above, the Government has also published a flowchart to help companies decide whether they will need to notify the Government about an acquisition.

To read the announcement, please click here.

To see the flowchart, please click here.

IA Principles of Remuneration

The Investment Association (IA) released its Principles of Remuneration for 2022 on 18 November 2021. The principles include updated guidance for remuneration committees ahead of the next AGM season. The main changes from the 2021 principles are aimed at clarifying sections on pensions, environmental, social and governance (ESG) performance measures and a new section on value creation plans. The key updates include:

  • Levels of remuneration – the Principles have been updated to emphasise that Remuneration Committees should provide a clear rationale for any significant increase to any element of remuneration.
  • Value creation plans VCPs) – the Principles have been updated to include a new section on member expectations for VCPs. The IA does not consider VCPs a “standard” arrangement and expects their adoption to be well supported by business circumstances and clearly explained in the context of the corporate strategy.
  • Grant size – the IA expects the Remuneration Committee to reduce LTIP awards at grant where share prices have fallen, rather than relying on discretion when awards vest.
  • Malus and clawback – the IA expects Remuneration Committees to establish a comprehensive list of malus and clawback triggers circumstances, which should be more expansive than simply gross Page 2 misconduct and misstatement of results.
  • Pension – the IA restates its expectation for Executive Directors’ pension benefits to align to that provided to the majority of the workforce by the end of 2022.
  • Discretion – the Committee should disclose how it has considered the experience of material stakeholders when operating discretion in incentive schemes.

To view the IA’s Principles of Remuneration, 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.

IASB and UKEB field testing Disclosure Pilot

The UK Endorsement Board (UKEB) in conjunction with the International Accounting Standards Board (IASB) are seeking UK companies to field-test the proposals contained in ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach (the Disclosure Pilot). This exposure draft proposes to replace mandatory disclosure requirements with an objectives based regime, and proposes amendments to the disclosure requirements in IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits. Field testing provides the opportunity to test the proposals, identify any issues specific to UK companies, and influence the further development of these proposals by the IASB. The UKEB will use the results of field testing to prepare the UKEB Comment Letter to the IASB, and all results of the field testing will be shared with the IASB.

The IASB has recently extended the deadline for the Disclosure Pilot until 12 January 2022, so they are now able to offer a wider and more convenient range of dates for field testing.

Field testing involves testing the IASB’s proposals, by either:

  • preparing mock disclosures applying the proposed requirements for IFRS13 and/or IAS 19; and/or
  • completing a questionnaire about the mock disclosures including questions about application; and/or
  • discussing with UKEB/IASB staff the process or impact of preparing the mock disclosures.

The UKEB are keen to understand the impact of the proposals on companies of all sizes, and are happy to be flexible to find a scope of field testing that fits with your ability to participate.

Please contact the UKEB on if you are interested in participating or would like to learn more about the field tests.


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

QCA policy consultation responses

The QCA has recently submitted responses to the following consultations:

  1. HM Treasury: UK Secondary Capital Raising Review (Deadline: 16 November 2021)

The consultation was published following Lord Hill’s recommendation to consider how to improve the efficiency of further capital raisings by listed companies through re-establishing a group such as the 2008 Rights Issue Review Group. The consultation will reconsider the 2008 group’s outstanding recommendations, particularly in terms of capital raising models in other jurisdictions and in light of technological advances. The aim of conducting this review is to facilitate a quicker and more efficient process of raising capital for existing listed companies and more easily involve retail investors.

In our response, we stressed the need for the rights issue process to become more time and cost efficient, as well as highlighting several fundraising models used in Australia that could be adopted here in the UK. Furthermore, we also mentioned the need to improve the system of intermediated securities to ensure that companies have easy access to their shareholders and vice versa.

To view the response, please click here.

The QCA is seeking views on the below consultation(s):

  1. HM Treasury: Future Regulatory Framework Review (Deadline: 9 February 2022)

This consultation sets out the Government’s response to the initial review, making a series of proposals to deliver the intended outcomes of the FRF Review and build on the UK’s existing framework. The FRF Review includes a proposal to add new growth and international competitiveness objectives for the FCA, as well as a proposal for the principle of sustainable growth to be updated to reference climate change and net-zero economy.

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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