UK Climate-related Financial Disclosures (CFD)
Search

UK Climate-related Financial Disclosures (CFD)

Complying with the UK Climate-related Financial Disclosures (CFD) mandate for transparent and responsible financial reporting.

Tress absorbing carbon emissions from the atmosphere as part of UK CFD

What is CFD?


The UK’s Climate-related Financial Disclosures (CFD) legislation is a mandatory reporting obligation for organisations in England, Scotland and Wales set by the Department for Business, Energy & Industrial Strategy (BEIS). This affects publicly quoted companies, large private organisations and Limited Liability Partnerships (LLPs). These regulations require entities to disclose how climate change impacts their financial risk and overall business model. Aimed at enhancing corporate transparency, CFD helps internal and external stakeholders understand the financial and operational implications of climate-related risks and opportunities.

Through these disclosures, BEIS seeks to promote informed investment decisions and to ensure resilience and longevity of business models against a range of climate futures.

Landscape which is improving due to UK CFD

Who is mandated to comply with CFD regulations?


  • All UK companies that are currently required to produce a non-financial information statement, being UK companies that have more than 500 employees and have either transferable securities admitted to trading on a UK regulated market or are banking companies or insurance companies (Relevant Public Interest Entities (PIEs)).
  • UK registered companies with securities admitted to AIM with more than 500 employees.
  • UK registered companies not included in the categories above, which have more than 500 employees and a turnover of more than £500m.
  • Large LLPs, which are not traded or banking LLPs, and have more than 500 employees and a turnover of more than £500m.
  • Traded or banking LLPs which have more than 500 employees.

A similar reporting framework, TCFD, is in place for standard-listed and premium-listed organisations falling within the Financial Conduct Authority (FCA) listing rules. Some organisations may be subject to both CFD and TCFD. Please refer to our TCFD page for more information.

A coastline with land on the right hand side which has benefited from UK CFD

Disclosure Points


CFD requires organisations to disclose against eight requirements (commonly referred to as (a) to (h)). This includes detailing their governance structures for assessing and managing climate-related risks and opportunities, the methods employed to identify, assess and integrate climate-related risks into their overall risk management strategies and an outline of the principal climate-related risks and opportunities. Entities must describe the actual and potential impacts of these risks and opportunities on their business models and strategies, including an analysis of their resilience under various climate-related scenarios. Organisations are also required to disclose the targets and key performance indicators (KPIs) set to manage climate-related risks and capitalise on opportunities, accompanied by a summary of their performance against these targets and the methodology behind the calculation of these KPIs.

Whale and a boat within UK CFD

Analysis Requirements


UK CFD mandates entities to conduct scenario analysis of climate-related risks and opportunities, with at least a qualitative assessment required. This entails an exploration of how climate change can impact the business, through acute and chronic physical risks and also considering the broader transitional challenges and opportunities that arise from a range of climate scenarios. Entities must outline their evaluation processes and methods, including their integration into strategic and risk management frameworks.

At a minimum, companies and LLPs must provide qualitative narratives that offer clear, understandable insights into the climate-related risks and opportunities they face. This requirement ensures that all stakeholders, including investors, can gauge the potential impacts of climate change on the entity’s financial performance and strategic direction.

A lake which has benefited from UK CFD

Why Choose McGrady Clarke for your CFD Disclosure?


At McGrady Clarke, our approach to CFD is characterised by a strategic perspective that prioritises transparency and strives to deliver added value beyond the basic compliance requirements.

We understand that navigating the complexities of CFD compliance presents a unique set of challenges and opportunities for organisations and our expertise is tailored to guide companies through this process with a keen eye on the broader implications.

With a deep-rooted knowledge of CFD requirements, our specialists ensure that your disclosures are bespoke to your organisation.

Trees which are absorbing carbon from UK CFD

Book a Consultation

Carbon being absorbed by trees through UK CFD

Articles

Sign up to our newsletter for the latest guides and insights:
Request a Proposal ×

If you’d like more information on how we could help your organisation, book a consultation today.

"*" indicates required fields

Preferences