The Investment Association (IA), which represents UK asset managers, is for the first time asking companies to explain in their annual report the impact climate change will have on their business model and how they are measuring and managing these risks.

It is expecting companies to report against the framework developed by the Task Force on Climate-related Financial Disclosures (TCFD) by 2022.

The trade body had previously not isolated climate change as a specific issue for companies to report on, having previously referred to environmental disclosures more generally, but has come to the view that it now needs to push companies harder specifically on climate change.

“With one third of the FTSE owned by IA members, our industry is looking to the UK’s largest listed companies to demonstrate that climate change is being taken seriously in boardrooms,” said Andrew Ninian, director for stewardship and corporate governance at the IA.

“Climate change could result in a significant loss of value in companies if risks are not effectively measured and managed, ultimately hitting savers’ pockets,” he added.

“Companies need to be looking at the impact of climate change on their business, products and strategy and set out to investors how they are responding to these risks.”

Any perceived shortcomings in reporting by FTSE-listed companies for this year’s AGM season will not be flagged by IA with a “colour top”, although it said it would “keep this under review for future years”.

IVIS, an IA corporate governance research service, issues reports on companies ahead of their AGMs with either a blue, amber or red “top”, depending on the level of concern about a given issue, if any.

IVIS will, however, for the first time this year be assigning a “red top” to companies that have 20% or less gender diversity in their senior leadership teams, in addition to their boards.

Additionally, it is tightening its demands with respect to executive pensions, flagging companies as “red” if they have an existing director with a pension contribution of 25% of salary or more, and have not set out a credible plan to reduce that contribution to the level of the majority of the workforce by the end of 2022.

It is also for the first time explicitly focussing on ethnic diversity, asking companies to disclose the percentage of its board that comes from an ethnic minority background.

According to the IA, its members would this AGM season also scrutinise audit committees’ explanations about how they have judged the quality of the companies’ audit.