Here are the climate-related sections of speeches by MPs during the Commons debate Draft Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2021.
09:25 The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
Climate change is the biggest challenge of our time, both to society and to the economy. Internationally the Government are taking a leading role to promote action through our presidency of the United Nations COP26, and domestically we are working to deliver the UK’s world-leading target of net zero greenhouse gas emissions by 2050. The Government have published our net zero strategy, which sets out the measures to transition to a green and sustainable future. To support the transition to net zero, it is important that economically significant companies assess, disclose and act to manage climate-related risks and opportunities. Without an accurate assessment of climate risks by companies, it will be impossible to assess what action is needed to address them. Information from those assessments should be taken into account in the business model and strategy of every company to create more climate-resilient businesses. It should also form a key part of all investment decisions.
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09:27 Mr Robert Goodwill (Scarborough and Whitby) (Con)
From listening to the Minister, I understand that we are talking about general statements about risks and opportunities, not about accounting for the carbon dioxide or other greenhouse gases produced in the same way as businesses produce business accounts for currency.
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09:28 Greg Hands
This is a qualitative assessment done by the 1,300 largest companies in this country—those with more than 500 employees—of how they see the risks and opportunities of climate change, to help their own company planning and also help investors looking at particular companies and across sectors. At this stage, the idea is to have a qualitative assessment from each company in its annual report. Producing annual reports is part of an established process.
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09:28 Mr Goodwill
Does the Minister think that in due course we might see a carbon balance sheet where companies have detailed information, so we would be able to tell exactly where they were in terms of their own net zero targets?
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09:29 Greg Hands
The Government have already introduced regulations to require climate disclosures, for example from occupational pension schemes. The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 were approved by both Houses and came into force on 1 October 2021. In addition, the Financial Conduct Authority has introduced TCFD-aligned disclosure in the UK listing rules for premium listed companies. It has also conducted a consultation on extending this to standard listed companies. The Government have now laid these draft regulations to integrate TCFD-aligned climate-related disclosures in UK corporate reporting.
The regulations we consider today will amend the Companies Act 2006 to place obligations on certain publicly quoted companies—banks, insurers and large private companies—to incorporate TCFD-aligned climate disclosures into their annual reports. These requirements will apply for an accounting period starting on or after 6 April 2022. Companies in scope will be required to make specific climate change-related disclosures in their annual strategic report in respect of governance, strategy, risk management, metrics and targets. These headings reflect the four thematic pillars of the TCFD framework.
The Government consider that the draft regulations are in the UK’s long-term interest to help to future-proof our economy against climate change. The Government want to ensure that companies and investors can make the most of the opportunities created as we transition the economy to net zero and sustainability, so we need companies to understand the risks and opportunities and report on them transparently. I commend the draft regulations to the Committee.
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09:36 Dr Alan Whitehead (Southampton, Test) (Lab)
The draft regulations are particularly welcome because of the importance of what the climate change imperatives facing large companies in the UK mean for the assumptions and practices—for example about the long-term duration of assets in the ground, or fossil fuels—that were previously widespread in the industry. The required disclosures will ensure that companies are clear about the risks in their operating portfolio, particularly the risks of stranded assets. Across the world, as the impact assessment suggests,
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09:41 Ms Anum Qaisar (Airdrie and Shotts) (SNP)
It is vital that tackling climate change is at the top of everyone’s agenda, as it is in Scotland, from our greener national policies in the Scottish Parliament to the fantastic work done by local community groups, charities and citizens. Since my election in May, I have been so impressed by my Airdrie and Shotts constituents’ work to tackle climate change. Of course, Scotland hosted COP26, and I am sure that we were all inspired by the work done by people from across the globe.
COP26 in Glasgow reinforced the idea that tackling climate change is a global issue and that everyone— every single person on this planet—can make a positive change. That leads me to an important point: at the heart of tackling climate change is the need for a rapid transformation across all sectors of our economy and of society. Large corporations must be transparent about their contributions to that transformation. The more that companies are required to publish climate-related financial disclosures, the more they will be encouraged to focus on becoming greener. That is a positive thing.
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09:41 Greg Hands
The hon. Member for Airdrie and Shotts raised the importance of COP26 in Glasgow, which vindicates the UK Government’s decision to host that conference. We are delighted with the success of COP26, particularly in areas such as financial disclosure, which builds on a lot of the activities that the Chancellor of the Exchequer and the whole of Government have been leading this year, including through the G7. COP26 tied all that in very well, which vindicated our decision to host it.
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