CDSB statement on the FRC advice

Our response to the FRC letter drawing companies' attention to the changes to reporting requirements and areas for improvement

Today the Financial Reporting Council issued its advice for companies preparing 2017/18 annual reports. 

The UK’s mandatory corporate reporting landscape is very well developed to capture the risks and opportunities businesses may face in the future. It is indeed important to disclose these risks for the protection of investors and the future resilience of the British economy.

The market’s understanding of what "financial risks" include is not complete, because it is based on an outdated risk landscape. This is evidenced, among others, by the need to form the G20 Financial Stability Board’s Task Force on Climate-related Financial Disclosures. We believe the FRC is ideally placed to educate the market in understanding that climate change may pose significant risks to the ability of businesses to continue creating value to their investors and society.

As such, it is important that the FRC takes a proactive role in evolving the UK’s corporate reporting landscape by eliciting that the potential impact of climate change should be considered when deciding what risks and opportunities to include in corporate annual reports. This list should not be perceived as applicable to all, but merely as examples of what risks may be material to businesses.

This would provide much-needed clarity to reporting companies and would be in line with the FRC’s role as a leading supervisory authority globally, as well as ensure the future protection of investors and promotion of transparency and integrity in business.

We encourage all organisations to respond to the FRC consultation on non-financial reporting guidance and look forward to continue supporting them in advancing non-financial disclosure.