The UK’s Department for Business and Trade (DBT), in conjunction with the Financial Reporting Council (FRC), has launched a review of non-financial reporting requirements for UK companies’ annual reports, aimed at making regulation fit for the post-Brexit era.
The government said: “Through the non-financial reporting review, the government is looking at what opportunities exist to refresh and rationalise current reporting requirements so that the UK’s non-financial reporting framework is fit for purpose and delivers decision-useful information to the market.”
In overview, the call for information is looking for input on:
- the cost and utility of current non-financial annual reporting;
- opportunities to streamline existing annual reporting requirements;
- reporting requirements outside the annual report such as modern slavery statements; and
- the thresholds and definitions used to set compliance and reporting thresholds for companies and limited liability partnerships.
The UK government set out its proposals for post-Brexit regulation in its Smarter Regulation to Grow the Economy policy paper published in May this year.
Last month, the business minister, Kemi Baddenoch, issued a written statement in which she announced the government had dropped plans to sunset all EU retained laws by the end of this year.
Additionally, the call for evidence also noted the work of the International Sustainability Standards Board (ISSB) to set a global minimum baseline in sustainability reporting.
The government has already committed through its Mobilising Green Investment: 2023 Green Finance Strategy to establish a mechanism for assessing those standards.
This assessment process is expected to begin once the ISSB has published its first two standards.
The government has already indicated it will consult on proposals to require the UK’s largest companies to disclose their transition plans, based on the work of the Transition Plan Taskforce (TPT).
This consultation is expected to launch later this year once the TPT has concluded its work.
The TPT is currently reviewing responses from an earlier request for information and is aiming to issue a disclosure framework and accompanying guidance after the summer.
This latest review follows an explosion in the burden of non-financial reporting requirements on companies. This has led to more voluminous and complex corporate annual reports.
The government hopes that this latest review will lead to a streamlining and modernisation of these requirements to make sure they remain relevant and decision useful.
Interested parties have until 16 August 2023 to respond to the consultation through an online survey.
The government has indicated it will use the evidence gathered to develop a consultation paper ahead of considering what, if any, legislative changes are necessary.
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