New climate-related disclosure requirements come into force for accounting periods beginning on or after 6 April 2022. Only a handful of charities though will be caught by these requirements, those which are limited companies and have more than 500 employees and have incoming resources of more than £500 million. These requirements, which are based on recommendations made by the Task Force on Climate-Related Financial Disclosures (TCFD), focus on the company’s Governance, strategy and risk management on climate issues as well as the metrics and targets used to assess the impact of climate-related risks and opportunities.
Many more charities will be subject to the existing Streamlined Energy and Carbon Reporting regulations, which apply to large companies, broadly those that exceed two out of three thresholds of income of £36 million, gross assets of £18 million or 250 employees. Guidance on these requirements was set out in Information Sheet 5 published by the SORP Committee in 2020.
Although the majority of charities are not currently subject to any mandatory reporting requirements on energy usage or the impact of climate change on their activities there are still potential climate-related reporting implications that trustees need to consider, perhaps the most obvious of which is need for larger charities with income over £500,000 to disclose details of the principal risks and uncertainties facing the charity as part of the trustees’ report, which would include any risks and uncertainties caused by climate-related issues. Trustees should though also consider the information needs of the users of their annual reports, acknowledging that increasingly this will involve the charity being judged on its green credentials. Providing the disclosure required by the SECR regulations on a voluntary basis may be a good place to start.