- ClientEarth Says Companies Are Violating FCA Rules
- FCA requested that both be referred for formal investigation
- Auditing watchdog alerts via Deloitte, PwC
LONDON, Aug 18 (Reuters) – The UK Market Authority has been asked to sanction cruise line Carnival (CCL.L) and grocery supplier Just Eat Takeaway.com for lack of disclosure in a Reuters complaint.
Both companies have violated their legal obligations by failing to adequately educate investors about the risk climate change poses to their companies, the legal NGO ClientEarth said.
While the Financial Conduct Authority has yet to sanction a company for its climate disclosures, the latest ClientEarth complaint is the first since the UK Treasury Secretary told the FCA in March to work on the government’s commitment to net zero carbon Achieve emissions, “pay attention”. Emissions by 2050.
The complaint also follows a stinging report by the Financial Reporting Council’s audit committee in November, which found that most corporate accounts were not properly addressing climate risk and needed improvement.
UK law requires a company to disclose material risks to its business that could affect its value so that shareholders can make an informed decision about their investment.
By failing to do so, Just Eat and Carnival have violated several of the disclosure and listing rules set by the FCA to help the functioning of markets, protect customers and improve the integrity of financial markets, the NGO said.
In the case of Just Eat, ClientEarth said the company made no reference to climate change in its 2020 financial reporting and did not have a strategy to reduce its carbon emissions in line with the Paris Agreement.
There was also limited commentary on its environmental impact and opportunity, including its food packaging, especially its use of plastics, and risked misleading investors about the sustainability of its business model.
A spokesman for Just Eat said it did not acknowledge ClientEarth’s allegations and disclosed all material information to investors in its annual report.
“We are committed to reducing our carbon footprint and providing accurate information to our key stakeholders,” said the spokesman, citing an ongoing plan to conduct a carbon footprint analysis of the company.
“This is currently in progress and once we have an accurate measurement in relation to the analysis, we will set reduction targets and report them in the coming months.”
Carnival made no reference to climate change in its annual report and only “vague” statements in its strategy report without a concrete analysis of the effects of climate change on its business model, said the NGO.
Carnival did not immediately respond to requests for comment.
“Recent global efforts to phasing out fossil fuels and single-use plastics, changes in consumer behavior and abrupt changes in the regulatory and business environment pose very real challenges to their financial and operational health,” said ClientEarth attorney Maria Petzsch.
“These ramifications are essential for investors as they expect to get the full picture.”
In a complaint filed on Tuesday, the environmental law charity said it had asked the FCA to refer both companies for investigation, even though the regulator is under no obligation to act.
A previous complaint from ClientEarth to the FCA regarding the disclosure of insurers Lancashire Holdings, Admiral and Phoenix Group in 2018 was unsuccessful.
The NGO also said it had written to the FRC, which oversees the accounting profession, to ask them to liaise with the FCA about any action in liaison with the company’s respective accountants, Deloitte and PwC.
A spokesman for Deloitte, PwC and the FCA declined to comment. The FRC did not immediately respond to a request for comment.
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Reporting by Simon Jessop; Editing by Anil D’Silva
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