• The Government vows to push ahead with the new PISCES trading perimeter 
• The FRC is consulting on changes to the UK Stewardship Code
• The IFRS Foundation publishes a review of progress on corporate climate-related disclosures
• Our colleagues explore insights and lessons from the first year of the EU’s Foreign Subsidies Regime
• The EU publishes FAQs on its Corporate Sustainability Reporting Directive (CSRD)

Government vows to push ahead with the new PISCES trading perimeter

The Government has reiterated its commitment to implementing the new PISCES trading framework.

In her first Mansion House speech, the Chancellor of the Exchequer, Rachel Reeves MP, confirmed that the Government intends to reinvigorate the UK’s capital markets by committing to legislate to establish PISCES by May 2025.

The Government has also reiterated its intention to exempt transfers of securities within PISCES from stamp duty.

PISCES (short for “Private Intermittent Securities and Capital Exchange System”) is a new framework to allow sophisticated investors to buy and trade securities in public and private companies in a controlled environment away from the primary capital markets, subject to a more proportionate disclosure and market abuse regime.

Rather than a trading venue per se, PISCES is a regulatory perimeter within which operators will be able to establish their own platform.  Securities on a platform within the PISCES framework would trade intermittently during so-called “trading windows” set by the platform operator.

Read our previous in-depth pieces on the PISCES trading framework

Read the Government’s press release on the Chancellor’s Mansion House speech

Read the transcript of the Chancellor’s Mansion House speech

FRC consults on changes to its Stewardship Code

The Financial Reporting Council (FRC) is consulting on changes to its Stewardship Code.

The Code sets out what the FRC considers best practice for institutional asset owners and asset managers when exercising their stewardship responsibilities.

Like the FRC’s UK Corporate Governance Code, it operates on a “comply or explain” basis. Certain asset managers are required to report against the Stewardship Code under the Financial Conduct Authority’s Conduct of Business Sourcebook. Other institutional investors can apply to become “signatories” to the Code and adopt it voluntarily.

Key proposed changes to the Code include amending the definition of “stewardship” to place more emphasis on investment objectives and value creation, as well as streamlining the Code’s principles to focus reporting on the most insightful areas.

The proposals would also introduce guidance for asset owners and managers on how to demonstrate that they have implemented stewardship during the year, as well as specific service provider principles tailored to proxy advisors and investment consultants.

Finally, the changes would entail the introduction of a new “Policy and Context Disclosure” and an “Activities and Outcomes Report”, to be submitted when applying to become a signatory and on an annual basis following that.

The FRC has asked for comments by 19 February 2025.

Access the FRC’s consultation on changes to the UK Stewardship Code

IFRS reports on corporate climate-related disclosures

The IFRS Foundation has published a review of progress on corporate climate-related disclosures.

The Foundation monitored early reporting under the Sustainability Disclosure Standards issued by the International Sustainability Standards Board (the ISSB Standards), which effectively codify and replace the recommended disclosures previously published by the Taskforce on Climate-related Financial Disclosures (the TCFD Recommendations).

Trading companies

The review encompasses companies in jurisdictions across the world and within a wide range of industries and sectors.

It found that, between October 2023 and March 2024, more than 1,000 companies referenced the ISSB Standards in their annual report.

The Foundation found a negative correlation between number of TCFD Recommendations and the proportion of companies that reported under them. In 2023, 82% of companies disclosed against at least 1 TCFD Recommendation. However, this dropped to 44% against at least 5 recommendations and 29% against at least 7 recommendations, with only 2% of companies making disclosures under all 11 Recommendations.

In all sectors, the report shows generally greater disclosure of metrics and targets than on strategy and risk management, mirroring trends in 2022.

Disclosure in 2023 was much higher in Europe than in other geographies, particularly in relation to metrics and targets, followed by North America, Africa, Asia-Oceania, and Latin America/Caribbean. (It is worth noting that the statistics for some areas are influenced by a preponderance of companies in a particular country. For example, 63% of African companies were South African, and 44% of Latin American companies were Brazilian.)

Asset managers and owners

The report also contains a section on the expectations of asset managers (i.e. investment managers) and asset owners (such as pension plans and endowment funds) in relation to climate disclosure.

72 asset managers/owners responded to the Foundation’s survey, comprising 64% managers and 36% owners, with 58% based in North America, 21% in Europe and 18% in Asia-Oceania. 86% of respondents stated that they currently report, or plan to report, on climate-related information.

In contrast to companies, disclosures by asset managers and owners concentrated less on metrics and targets and more on governance, oversight, risks and opportunities, and risk management, which is unsurprising and no doubt reflects investment in, rather than operation of, portfolio companies.

Asset managers and owners most commonly cited a lack of resources and concerns about negative regulatory or other stakeholder scrutiny as challenges to reporting under the TCFD Recommendations.

Access the IFRS Foundation’s review of progress on corporate climate-related disclosures (opens PDF)

Looking back at the EU Foreign Subsidies Regime in practice

Over a year has passed since the European Union’s Foreign Subsidies Regulation (FSR) fully entered into force, with the European Commission using its new powers to scrutinise both M&A transactions and public procurement processes for distortive foreign subsidies.

Our colleagues have analysed how the regime has been operated in practice during that time, exploring insights and lessons learned from the first year of its implementation, as well as practical tips to help firms navigate the regime’s requirements effectively.

Read our colleagues’ in-depth piece on the EU Foreign Subsidies Regime after a year

European Commission publishes guidance on reporting under CSRD

The European Commission has published a set of frequently asked questions (FAQs) on reporting under the EU’s Corporate Sustainability Reporting Directive (CSRD).

The CSRD mandates sustainability-related reporting for larger companies in the EU (including larger foreign issuers), increasing the availability and comparability of data available to asset managers and institutional investors, among other interested parties.

It will come into effect in stages, beginning in 2024 for companies already subject to the EU’s Non-Financial Reporting Directive (NFRD). From 2025, it will apply to large companies that are not currently subject to the NFRD and, from 2026, to listed small and medium-size enterprise (SMEs), small and non-complex credit institutions and captive insurance undertakings.

The CSRD does not apply in the UK but will affect UK companies with securities listed on an EU-regulated market. In addition, from 2028, it will also affect UK companies that generate net turnover in the EU above €150m and have a large subsidiary or branch, or a listed subsidiary, in the EU.

Access the European Commission’s FAQs on the EU Corporate Sustainability Reporting Directive