Mandatory Reporting in the UK

In April 2022, the UK enacted two mandatory ESG disclosure laws.

These are: The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022. These Regulations require certain companies to provide climate-related financial disclosures in their strategic report.

These companies are:

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 not included in the categories above, which have more than 500 employees and a turnover of more than £500m; ·

Large LLPs, which are not traded or banking LLPs, and have more than 500 employees and a turnover of more than £500m and;

· Traded or banking LLPs which have more than 500 employees.

Source: Government’s Q&A guidance on how to apply the new requirements

The impact of the new legislation will not only be on the UK’s largest companies and financial institutions but also on the thousands of businesses in their supply chains – stressing once again the importance of getting your ESG reporting going despite of whether you are directly affected or not. ESG Disclosure in the UK rules will apply to large companies that are either listed, exceed £500 million in annual turnover, or have more than 500 employees Companies will be required to report on energy use and Scope 1 and 2 emissions within the UK.

Starting in 2023, ESG reporting in the UK will be further formalized through international ESG guidelines https://www.fsb-tcfd.org/ This is a fast-moving and changing environment, with FCA now announcing that developing a code of conduct for ESG data and rating providers. Current ESG regulatory landscape in the UK Current ESG Regulatory is only a first and is quite limited as it does not address scope 3 and by definition, ambiguous as it does not require full ESG Disclosure but refers to TCFD, which focuses on Climate-related disclosures

London Stock Exchange https://www.lseg.com/en

Our sustainability ambition LSEG’s purpose is driving financial stability, empowering economies and enabling customers to create sustainable growth. We deliver on our purpose through the products and services we provide and through our wider role in financial markets and society. We have a key role in enabling sustainable economic development, which demands a balance of economic progress, social inclusion and environmental protection. Given LSEG’s central position within financial markets, its global presence and role throughout the trade lifecycle, we have a critical role in helping to re-engineer the financial ecosystem, contributing to the global imperative to decarbonise, innovating and growing the green economy, while ensuring that everyone can benefit from sustainable economic growth. Our ambition is to be a strategic enabler of sustainable economic growth and a recognised sustainability leader in global financial markets. Future outlook The future outlook will include a more comprehensive ESG regime – action and disclosure with a focus on social, supply chains, and measures being taken to reduce carbon and engage in social initiatives.

A good comparison can be made to the India Sustainability and ESG framework

https://www.gov.uk/government/news/uk-to-enshrine-mandatory-climate-disclosures-for-largest-companies-in-law https://www.ftadviser.com/investments/2022/11/22/fca-creates-working-group-to-develop-esg-code-of-conduct/