In the UK, premium listed companies and financial institutions are now required to disclose on how they identify, assess, and manage climate-related risks and opportunities. This currently includes some bigger letting agents.
Kamma recently published an ultimate guide covering everything companies and financial institutions need to know about climate-related financial disclosures and how to overcome property data challenges. In this article we are applying this to letting agents. So let’s start with why it is important for letting agents to understand climate-related financial disclosures.
So what information needs to be disclose?
Calculating emissions for the purpose of disclosures means collecting more data on emissions, understanding weaknesses in data sets, and recalibrating for accuracy. It’s of great importance that businesses in this space are able to understand the risks involved and use accurate data to represent their property-assets truthfully and reach more informed decisions.
You can read more about the sort of information that needs to be disclosed here.
Who needs to comply with the new requirements?
Since April 2022, more than 1,300 of the country’s largest private companies, LLPs, banks, and insurers incorporate TCFD-aligned disclosures into their annual reports. Under guidance of the Department for Business, Energy and Industrial (BEIS), these rules now apply to the UK’s largest traded companies, banks and insurers, as well as private companies with over 500 employees and/or £500 million in turnover. So whilst it’s true that most letting agencies will not need to comply with the new regulations yet, it is likely that more agencies will need to report on their financial emissions in a few years as the scope of disclosures widens. In the meantime, larger corporate agents with more than 500 staff will still need to comply with the new regulations and standards.
And why should agents care about disclosing their financial emissions?
Reporting on climate-related emissions now help agents attract new climate conscious customers and investment. For example, investors now recognise that climate risks are financial risks, and they’re doing their due diligence on companies to make sure they’re up to standard. A PwC report showed that 79% of investors agree that a company’s approach to ESG risks and opportunities is an important factor in investment decision-making. While it is difficult to measure, manage, and analyse climate performance, often because of poor quality data, it is useful for investors to differentiate between safe and risky investments. This means that disclosures must be built on comparable, high-quality data.
Much of the momentum of disclosures is driven by heightened stakeholder demand, which itself is driven forward by three key dynamics:
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