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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 Annual Review

On 20 October 2021, the QCA held its Annual General Meeting (AGM) and published its Annual Review. The Annual Review highlights the QCA’s key achievements in 2020/21 and includes commentary from our Chief Executive, Tim Ward, our Chair, Adam McConkey, our Treasurer Paul Watts, as well as updates from the Chairs and Deputy Chairs of our seven policy Expert Groups.

To download the QCA’s Annual Review, please click 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.

FRC Lab report on TCFD reporting and FRC report on scenario analysis

Premium Listed companies will required this year to report against the Taskforce on Climate-relate Financial Disclosures (TCFD) recommendations on a comply or explain basis in their annual reports.

Ahead of these requirements, the FRC Lab has published a report to help companies prepare for their mandatory TCFD reporting obligations. The report includes practical advice and examples that address aspects of TCFD reporting from companies already adopting the framework on a voluntary basis.

In addition to this report, the FRC has also published research, conducted by the Alliance Manchester Business School, which investigates climate-related scenario analysis in more detail. Scenario analysis has been identified as one of the biggest challenges for companies adopting the TCFD framework and the research highlights the various approaches companies have adopted, examples of good practices, the types of challenges faced, and the common steps taken to conduct the analysis.

To view the FRC Lab report on TCFD reporting, please click here.

To view the research on scenario analysis, please click here.

FRC Lab report on digital reporting

On 12 October, the Financial Reporting Lab published a report on digital reporting in order to assist companies in their reporting obligations. The report has been produced as, under the Disclosure Guidance and Transparency Rules, certain companies will be required to produce their 2021 annual financial reports in an electronic format. The report aims to assist companies to ensure that the data contained within the reports is of high quality.

As part of this, the Lab reviewed fifty reports that are already using the electronic format for their annual financial reports. However, in doing so, the Lab found that many reports were lacking in the quality expected. The report, therefore, sets out some key considerations and tips for companies, including on:

  • How to set up the structure reporting process;
  • How to enhance the usability of structured reports; and
  • Common tagging issues to avoid.

The Lab will also be organising a short webinar on 7 December 2021 to go through the findings of the report and provide tips for companies. Details of the webinar, including on how to sign up, can be found here.

To view the full report, please click here.

FRC review of APMs

In October, the FRC released a review into the use of Alternative Performance Measures (APMs) by UK-listed companies. The review found that companies in general needed to be more transparent about their use of APMs and the linkages made to their IFRS or UK GAAP results.

The report states that most companies were providing good quality APM disclosures, but that the context needed to be better explained. The FRC mentions that companies should clearly define their APMs and explain why they are needed, but not give them greater focus than their GAAP equivalents.

The FRC also highlighted the following areas for improvement:

Other aspects of APM reporting the FRC expects companies to improve include:

  • providing an even-handed treatment of gains and losses when classifying amounts as adjusting items;
  • ensuring APM reconciliations and calculations are complete and transparent;
  • explaining terms used in describing APMs, such as providing ‘underlying results’ or adjusting for ‘non-recurring’ items; and
  • providing more detailed information about the cash and tax impact of adjusting items, and on the potential impact of adjustments for multi-year restructuring programmes on future results.

To view the full report, please click here.

FRC Annual Review of Corporate Reporting

On 27 October 2021, the FRC published its Annual Review of Corporate Reporting, which outlines the FRC’s top ten areas where improvements to reporting are needed. In total, the FRC review 246 reports and accounts and wrote to 97 companies with substantive questions about their reports. Overall, the review found that, despite the impact of Covid-19, the quality of reporting had remained unchanged.

The FRC stated that they were please to see examples of good quality reporting and improvements in some specific aspects of certain disclosures. This included:

  • Strategic reports – the quality of strategic reports continued to improve with fewer instances where there was a need to challenge a company’s compliance with the requirement to produce a report that is fair and balanced.
  • Alternative Performance Measures (APMs) – companies generally improved their reporting of APMs, particularly in their labelling and definitions.
  • SECR rules – companies generally complied with the statutory reporting requirements of the SECR rules.
  • Interim reporting – the quality of interim reporting had improved.

The top ten issues the FRC raised with companies were:

  1. Judgement and estimates
  2. Revenue
  3. Statement of cash flows
  4. Impairment of assets
  5. Alternative performance measures
  6. Financial instruments
  7. Strategic Report and Companies Act
  8. Provisions and contingencies
  9. Leases
  10. Income taxes.

If you wish to see the Annual Review of Corporate Reporting, please click here.

FRC year-end bulletin

Towards the end of October, the FRC published its year-end bulletin of key corporate reporting matters for companies. This sets out the FRC’s areas of focus for the coming year. 

From next year, premium listed companies will be required to disclose their compliance with the Taskforce for Climate-related Financial Disclosures (TCFD) recommendations on a comply-or-explain basis. The FRC also expects material climate change policies, risks and uncertainties to be included in narrative reporting and appropriately considered and reflected in the financial statements.

To view the bulletin, please click here.

Chancery Lane publishes net zero toolkit

At the end of September, The Chancery Lane Project published its Net zero toolkit to help organisations meet their net zero goals. The Chancery Lane Project is a collaborative forum of individuals who aim to create climate change solutions. The toolkit has been published specifically for lawyers to help them amend their contracts to meet net zero goals ahead of the UN’s climate conference (COP26) which will take place in November 2021.

The toolkit includes:

  • Free-to-use climate clauses that are aligned with the Paris Agreement goals.
  • Net zero implementation tools to help lawyers understand the concept of net zero and accurately define climate terms.
  • Other tools, including a timeline and net zero transition map.

The new clauses primarily cover corporate governance, supply chain contracts, finance and insurance contracts and construction and infrastructure projects.

If you wish to view the toolkit, you may do so here.

Fourth TCFD status report

On 14 October 2021, the Task Force on Climate-related Financial Disclosures (TCFD) published its fourth status report. The status report highlights the greatest progress made to date on TCFD adoption.

The TCFD also released new guidance for companies to disclose their plans for a net zero transition in line with the Paris Agreement, including disclosure of seven categories of cross-industry metrics like Scope 1, 2 and 3 GHG emissions. This includes:

  • Updated implementing guidance which replaces the 2017 annex to the TCFD recommendations. Specific elements of the implementing guidance for all sectors and supplemental guidance for the financial sector have been updated. Disclosure of companies’ net zero transition plans is also covered.
  • New guidance on metrics, targets and transition plans which supports companies in making disclosures and linking them with estimates of financial impacts. This explains how climate-related metrics, targets, and information from transition plans provide useful information to estimate the financial impacts of climate-related issues.

The status report itself states that TCFD-aligned disclosures have grown over the past year and that the majority of the world’s 100 largest companies were issuing disclosures on their climate-related risks and opportunities. Despite this, the TCFD highlighted the need for significant improvements to be made.

To view the full status report, please click here.

Chancellor announces new standards for environmental reporting

On 18 October 2021, HM Treasury published a policy paper, Greening Finance: A Roadmap to Sustainable Investing. The paper outlines the Government’s ambitions to green the financial system and align it with the UK’s net zero commitment. The paper also sets out new Sustainability Disclosure Requirements (SDR) that will require companies, financial institutions and occupational pension schemes to disclose sustainability-related information.

As part of this, the Government has also released details of the UK green taxonomy. The taxonomy aims to prevent “greenwashing” and will act as a type of dictionary as to which economic activities can be considered “green”.

The roadmap also acts as a call to action for the pensions and investment sectors. The roadmap sets expectations that these sectors will use the information generated by the SDR to allocate capital in a way that aligns with a net zero economy.

HM Treasury has set out a timeline of expected events, including:

  • November 2021 – a series of discussion papers will be published, focussing on SDR disclosures and the sustainable investment regime.
  • Q1 2022 – a consultation on climate change mitigation and adaptation criteria under the UK green taxonomy will be published.
  • 2022 – the Government intends to update its Green Finance Strategy, including setting out a transitional pathway to align the financial system with the UK’s 2050 net zero commitment.

To read the report, please click here.

FRC publishes oversight responsibilities and independent supervisor reports

Towards the end of October, the FRC published its annual report to the Secretary of State for Business, Energy and Industrial Strategy (BEIS) on how the regulator has discharged its oversight responsibilities in 2020/21. The report was laid before Parliament later on 21st October 2021.

To view the report, 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 Prospectus Regime Review (Submitted: 24 September 2021)

This consultation is focussed on the fundamental reform of the current prospectus regime, removing duplication, eliminating unnecessary costs and burdens, and broadening the range of stakeholders in fundraisings. The QCA’s working group, consisting of members of the Legal and Primary Markets Expert Groups and wider QCA membership, submitted a comprehensive response largely in agreement with the direction of travel away from the costly “one-size-fits-all” approach taken by the EU in relation to prospectuses. In particular, we advocated for increasing flexibility, improving efficiency, balancing the interests of stakeholders, abolishing the 20% rule, and raising the €8 million exemption to £20 million.

Please click here to view the response.

  1. HM Treasury: Wholesale Markets Review (Submitted: 24 September 2021)

HM Treasury’s consultation includes proposed changes to the UK’s wholesale markets, including consideration of a new class of trading venue with regulatory requirements tailored for SMEs. The QCA’s working group, comprising members of the Secondary Markets Expert Group, submitted a detailed response to the consultation. In particular, we highlighted the importance of liquidity and retail access to small and mid-cap companies.

Please click here to view the response.

  1. IASB: Third Agenda Consultation (Submitted: 27 September 2021)

The consultation sought views on what the Board’s priorities should be over the next five years, including on: the strategic direction and balance of the Board’s activities; the criteria for assessing the priority of financial reporting issues that could be added to the work plan; and new financial reporting issues that could be given priority in the Board’s work plan.

Please click here to view the response.

  1. FCA: Diversity and inclusion on company boards and executive committees (Submitted: 20 October 2021)

The consultation is focussed on a proposal to change the FCA’s Listing Rules to require companies to disclose annually on a comply or explain basis whether they meet specific board diversity targets. Overall, the QCA welcomes the FCA’s approach in taking the lead on encouraging greater diversity on company boards. However, we stress the need for the FCA to take account of the ability of smaller companies to comply with the proposed targets particularly within the current proposed timeframe.

Please click here to view the response.

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

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

The consultation has been 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.

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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