FRC release ESG Statement of Intent

The Financial Reporting Council (FRC), the UK’s watchdog for accountants, auditors and actuaries, has unveiled its Statement of Intent to address current challenges with ESG reporting. This statement provides an extensive list of modus operandi that will be implemented by 2023 through developing guidance on communication about environmental social governance information, as well as examining companies’ materiality processes in order to provide stakeholders with decisive data.

The FRC has made a commitment to deepening its oversight of climate-related risks in financial reporting, actuarial work and corporate governance. In particular the audit quality inspections program will focus on linking audited financial statements with annual reports that contain comprehensive ESG disclosures. This is part of an effort to ensure sustainability remains at the forefront for business operations today and into future years.

Mark Babington
Executive Director,
Regulatory Standards

FRC Executive Director of Regulatory Standards Mark Babington commented “Improving transparency on climate and wider ESG risks and opportunities, and related governance activities and behaviours, is a key priority for our work, benefitting all those stakeholders who demand decision-useful reporting which underpins effective decision-making in capital markets.”

In light of the expanding ESG reporting trend, the FRC will update their UK Corporate Governance Code to account for its increasing significance within corporate boardrooms.

As the FRC continues to tackle sustainability-related initiatives, companies should prepare for a potential rise in ESG considerations influencing UK corporate reporting in 2023. This trend emphasises that sustainability needs are permeating every aspect of financial management.

The full Statement of Intent can be read here.

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