London Climate Action Week
As the UK regulatory body for the accounting, auditing and actuarial sectors, the issue of climate change is high on the Financial Reporting Council’s (FRC) agenda
Wednesday 1 July marked the start of London Climate Action Week (digital), bringing together experts and policy makers to discuss the challenge of climate change, and possible solutions. The events of 2020 have shown us how challenging disruptive events on a global scale can be – making clear the need to address the changing climate and its impacts on our lives and the societies we live in. There are many calls to action for all parts of society to respond to, and to do so quickly.
Climate change is high on the FRC’s agenda as the regulator of the accounting, auditing and actuarial sectors. They play a key role in ensuring market and financial system participants take into account climate-related issues and that companies provide information to investors and other stakeholders about their plans for the future and the challenges and opportunities they face in a future low carbon economy.
To encourage all to take action, the FRC is carrying out a thematic review to understand what boards, companies, auditors and professional bodies are doing to consider and report on the climate-related issues they face within their own areas of responsibility. The Joint Forum on Actuarial Regulation, of which the FRC is the Chair, also recently identified climate change as a main risk in its ‘Risk Perspective’. The FRC itself, and those we regulate, need to rise to the challenge climate change poses for us all.
Of course, reporting on the effects of climate is not easy. It involves making assessments of an uncertain future and how this will affect business models, future performance and society more generally. Working out how we benchmark against this uncertain future is something we all have to consider as our work in this area continues, and as our expectations and knowledge evolve.
There is a lot of work happening on climate change at the moment, whether it’s the FCA’s consultation on ‘comply or explain’ reporting on TCFD (Taskforce on Climate-related Financial Disclosures), work on the Pensions Bill regarding climate change, the IASB briefing note on the impact of climate change on financial reporting, or the efforts and insights shared by those taking part in the London Climate Action Week events.
Addressing climate change is not easy. But as we plan for COP 26 in 2021, the direction of travel for regulation, investor reporting and the needs of society are becoming ever clearer. Ambitions are being raised, and the FRC is looking to see if auditors, accountants and actuaries are adequately playing their part in addressing the climate challenge.