FRC reviews CFD by AIM and large private companies

The FRC has conducted a thematic review of Climate-related Financial Disclosures (CFD) by AIM and large private companies, following the first cycle of mandatory reporting. 

CFD requirements were introduced for accounting periods beginning on or after 6 April 2022 and require companies to report on climate-related risks and opportunities if they have 500 employees and are either traded, banking, insurance or AIM companies, or private companies or Limity Liability Partnerships with turnover exceeding £500m. 

In the review, FRC found that among the companies selected there was “inconsistent quality” despite meeting the CFD requirements. 

This is the first time since the introduction of the requirements that the FRC has carried out a review which aims to highlight key lessons for AIM and large private companies in scope of CFD requirements.

The publication sets out examples of “good” practice and identifies areas where preparers can provide more “consistent, coherent and concise disclosures”.

Sarah Rapson, executive director of supervision, said: “As many AIM and large private companies continue to consider the impact of climate on their strategy, operations and people, the importance of robust frameworks that support preparers to assess risks and opportunities will continue to grow.

“This review provides clear examples for preparers that will enable them to meet these new Companies Act requirements. As reporting continues to mature, this review will provide a benchmark for organisations to build upon.”