Audit and corporate governance white paper: a new "resilience statement" - 5 things to know

Companies grappling with enhanced climate and sustainability reporting will no doubt be eager to understand how a proposed new "Resilience Statement" fits into all of this.

Here are 5 key things you should know:

1. Background: On 18 March 2021, BEIS published a consultation paper on wide-ranging reforms to modernise the UK's audit and corporate governance regime. At the heart of this is trust, transparency, and a long-term view to the resilience and success of companies.

2. Who and what: One proposal is to introduce a new annual “Resilience Statement” in a company's strategic report. This would initially be for premium listed companies, extending to other public listed entities two years later.

3. Reporting timeframe: A Resilience Statement would set out how directors assess the company's prospects and address challenges to the business model over the short, medium and long-term.

4. Content: The content of the Resilience Statement would be left to individual companies – favouring flexibility over rigid templates. Suggested areas include: climate change risk, business continuity and liquidity threats in response to major disruptive events, supply chain resilience, digital security risks and data breaches and sustainability of dividend policy.

5. TCFD: The government invites views as to whether the Resilience Statement could be the place where TCFD disclosures are made. This will be of significant interest to premium listed issuers who, under a recent new FCA Listing Rule, will be required to make TCFD disclosures for accounting periods beginning on or after 1 January 2021, initially on a comply or explain basis. These companies will need to report in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosures on how they manage climate risk with reference to their governance, strategy and risk management processes and metrics and targets used.

Our summary of the broader white paper (including beyond the Resilience Statement) is available here: UK – Directors to face stronger enforcement of corporate reporting and audit duties

The deadline for responses to the consultation is 8 July 2021.