The business ministry said disclosures should be in line with recommendations from the global Task Force on Climate-related Financial Disclosure (TCFD), set up by the G20 rich countries to coordinate rules.
“To support our transition to net zero, the Government considers it important to ensure that companies with a material economic or environmental impact or exposure assess, disclose and ultimately take actions against climate-related risks and opportunities,” the business ministry said.
The TCFD has produced recommendations for companies to disclose actual and potential impacts of climate change, as well as how they identify and manage such risks and opportunities.
Such disclosures are now voluntary, and a move to make them mandatory in Britain is seen as a step towards a new set of global standards.
The ministry said it was backing a move by the IFRS Foundation, which writes global accounting rules, to develop international sustainability-related reporting standards.
The Investment Association, which represents asset managers, welcomed the proposal to make climate risk reporting mandatory.
The move would “support investment managers to better communicate climate risk to their pension fund clients, enabling them to meet their disclosure requirements and better understand the impact of their investment portfolios,” said Sarah Woodfield, stewardship manager at the Investment Association.