On 26 June 2023, the International Sustainability Standards Board (“ISSB”) published its inaugural International Financial Reporting Standards Sustainability Disclosure Standards (the “ISSB Standards”) (read our previous blog post on this here).  In August 2023, the UK Financial Conduct Authority (“FCA”) published Primary Market Bulletin 45, confirming its intentions to update its climate-related disclosures for listed companies under the Listing Rules (see LR 9.8.6 R (8) and LR 14.3.27 R) to reference UK-endorsed ISSB Standards.

The UK government previously signalled its support for the ISSB Standards in Greening Finance: A Roadmap to Sustainable Investing, and, more recently, its 2023 Green Finance Strategy, noting that the ISSB Standards will augment corporate reporting and improve the transparency of issuers’ activities, thereby helping investors make greener capital allocation decisions.  Subject to the completion of the UK government’s endorsement of the ISSB Standards by the summer of 2024, the UK FCA will aim to finalise its policy position by the end of 2024, with a view to bringing new requirements into force for accounting periods beginning on or after 1 January 2025.  This means that the first corporate reporting cycle will begin from 2026.

Within Primary Market Bulletin 45, the FCA has also confirmed that it will consult on its proposals for the publication of climate transition plans by listed companies, building on the work of the UK Transition Plan Taskforce (“TPT”), which was commissioned by the UK government in 2022. In November 2022, the TPT published its draft Disclosure Framework and Implementation Guidance.  It is expected to publish its final disclosure framework for transition plans in October 2023.

In order to ready listed companies to disclose against the ISSB Standards, the FCA has helpfully outlined key steps they can now take, most notably encouraging them to:

1. Continue to improve their reporting in line with existing climate-related disclosure rules (referencing the TCFD Recommendations and accompanying guidance);
2. Engage early with the new ISSB Standards, the associated guidance and TPT Disclosure Framework and Guidance (once published in October 2023); in order to build familiarity and develop an understanding of the key disclosure requirements; and
3. Voluntarily “supplement their existing reporting with reporting aligned with both the ISSB Standards and TPT Framework, ahead of potential future requirements”, in order to identify any data gaps and opportunities to improve their internal reporting frameworks and processes.