FRC: Thematic review of climate-related financial disclosures by AIM and large private companies

On 21 January 2025, following the first cycle of mandatory reporting, the Financial Reporting Council (FRC) published a thematic review of climate-related financial disclosures (CFD) made under s414C, s414CA and s414CD of the Companies Act 2006 (CA 2006) by in-scope AIM and large private companies (Review).

The Review highlights examples of good practice as well as identifying areas for improvement. Given the CFD reporting provisions are a new requirement (which apply to accounting periods starting on or after 6 April 2022), the FRC recognises that practices will continue to mature but notes that it expects the quality of reporting to improve and will take that into account in future correspondence with companies.

The Review notes that, in many cases, companies had endeavoured to meet the requirements but that the quality of reporting varied with areas for improvement identified for most companies. Key findings included:

• Several companies failed to provide scenario analysis as required (or did not provide sufficiently company-specific disclosure) - the FRC acknowledges that producing this disclosure is challenging and will likely develop over time.
• Improvement is required for disclosures regarding climate-related targets and assessing progress against these using KPIs – only half of the companies reviewed presented all of the required information.
• Whilst companies almost always provided disclosure regarding governance arrangements in respect of climate-related risks and opportunities, these were sometimes spread throughout the annual report and accounts (ARA) in an unstructured way.
• Companies generally included sufficient information explaining their climate-related risk assessment and management process and its integration with overall risk management, but in some cases did not explain how climate-related risks/opportunities were identified.
• Although most companies disclosed climate-related risks, they did not always identify opportunities and nor did they always describe the timeframe over which risks/opportunities were assessed.
• Some companies voluntarily based their disclosures on the Task Force on Climate-Related Financial Disclosures (TCFD) framework, but in a number of cases such companies failed to present one or more of the disclosures required under the CA 2006.
• In some cases, companies referred to climate-related information presented outside their ARA (presenting CFD outside the ARA does not comply with the CA 2006 requirements).

The Review notes that better disclosures were generally more concise (and often used tables/diagrams to convey the relevant information) and reminds companies that good CFD disclosures do not have to be long or complex. However, the FRC expects companies to ensure all disclosures required by the CA 2006 are included in the ARA and are made in compliance with the reporting requirements.

(FRC, Thematic review: Climate-related financial disclosures by AIM and large private companies, 21.01.2025)
(FRC, Press release, 21.01.2025)

Companies House: ECCTA – Updates to outline transition plan

On 21 January 2025 Companies House updated its outline transition plan in relation to the Economic Crime and Corporate Transparency Act 2023 (ECCTA) to add dates from which Companies House should be able to:

• Receive/assess applications from individuals seeking to have residential addresses suppressed from public disclosure where they have been used as a registered office address (27 January 2025).
• Carry out checks on Authorised Corporate Service Providers (ACSPs) to authorise them to carry out verification services (25 February 2025).
• Expedite the striking off process where companies have been registered on a false basis (25 February 2025).
• Allow individuals to voluntarily verify their identity (25 March 2025).

(Companies House, Economic Crime and Corporate Transparency Act: outline transition plan, 21.01.2025)
(Companies House, Reflecting on a landmark year blogpost, 21.01.2025)
(Companies House, webpage for outline transition plan, 21.01.2025)

Parliament: The Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025 and Unique Identifiers (Application of Company Law) Regulations 2025

On 23 January 2025, the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025 (IDV Regulations) and related explanatory memorandum were published.

Under the Companies Act 2006, as amended by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), directors and persons with significant control of companies will in due course be required to verify their identity, either directly with the Registrar of Companies (Registrar) or via an authorised corporate service provider (ACSP). Key areas covered by the IDV Regulations include:

• Setting out the procedure to be followed for an individual to have their identity verified (or reverified) by the Registrar or an ACSP.
• Obligations of ACSPs in relation to record keeping and provision of information to the Registrar (and related offences) as well as the framework for deauthorisation of ACSPs.
• Provisions relating to the allocation and discontinuation of “unique identifiers” which will be allocated to ACSPs and to persons who have had their identity verified.

The IDV Regulations were made on 20 January 2025 and will come into force (as applicable) when sections 65 (procedure etc for verifying identity), 66 (authorisation of corporate service providers) and 68 (allocation of unique identifiers) of ECCTA come fully into force.

On the same date as the IDV Regulations the Unique Identifiers (Application of Company Law) Regulations 2025 (UID Regulations) and related explanatory memorandum were published – these are intended to insure that unique identifiers are able to be allocated and used in relation not only to companies but also to other business entities (such as LLPs) which are within scope of the relevant provisions of ECCTA. The IDV Regulations were also made on 20 January 2025 – they will come into force at the same time as section 68 of ECCTA comes fully into force.

The IDV Regulations and UID Regulations are both in substantially the same form as previous draft instruments (see here and here).

(Parliament, The Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025, 20.01.2025)
(Parliament, Explanatory Memorandum - The Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025, 20.01.2025)
(Parliament, Unique Identifiers (Application of Company Law) Regulations 2025, 20.01.2025)
(Parliament, Explanatory Memorandum - Unique Identifiers (Application of Company Law) Regulations 2025, 20.01.2025)

PLSA: Stewardship & Voting Guidelines 2025

On 23 January 2024 the Pensions and Lifetime Savings Association (PLSA) published the 2025 edition of its Stewardship & Voting Guidelines (2025 Guidelines).

In the 2025 Guidelines the PLSA considers, among other things: recent political and economic events with a direct impact on stewardship issues, the impact on shareholder rights of changes to the UK listing rules and AI developments, sustainable finance developments (including the PLSA’s efforts to increase focus on considering nature as part of good company practice), social factor developments (including the PLSA’s social factor case studies), and workforce developments (including issues such as maternity/paternity pay and leave policies and ethnicity and disability pay reporting).

The 2025 Guidelines are available on the member area of the PLSA website.

(PLSA, Stewardship & Voting Guidelines 2025, 23.01.2025)