Research into the prevalence, nature and reporting of Environmental Credits among UK listed companies

The UKEB is the UK National Standard Setter for international accounting standards. It is responsible for deciding which international accounting standards are adopted for use in the UK. The UKEB serves the UK long-term public good by leading the debate on the development of high-quality international accounting standards that are suitable for adoption in the UK. It develops and synthesises UK views on financial reporting and presents them in the international arena to maintain an influential and effective UK voice.

The Financial Reporting Council ("FRC") on behalf of the UK Endorsement Board ("UKEB") is conducting this Invitation to Tender. The contracting entity will therefore be The Financial Reporting Council ("FRC") on behalf of The UK Accounting Standards Endorsement Board ("UKEB").

The International Accounting Standards Board (IASB) has identified pollutant pricing mechanisms as a research pipeline project and is considering whether further standard-setting activity may be required in this area. Environmental credits, including carbon credits, emissions allowances, biodiversity credits, nature-based credits and other emerging environmental market instruments, have become increasingly important features of the transition to a lower-carbon economy. However, questions remain regarding their recognition, measurement and disclosure in financial statements.

The UKEB's extensive previous research on climate-related financial reporting, intangible assets and broader reporting challenges has highlighted the importance of understanding how emerging assets, obligations and regulatory mechanisms are reflected in financial reporting.

To support future engagement with the IASB and wider international standard-setting discussions, the UKEB will commission targeted research into the prevalence, nature and reporting of environmental credits among UK listed companies.

While the IASB's current interest is focused on pollutant pricing mechanisms, the proposed research will consider a broader population of environmental credit arrangements in order to understand emerging market developments and identify potential implications for future standard-setting.

For the purposes of this research, environmental credits refer to tradable instruments created by, or arising within, regulatory, compliance or market-based mechanisms designed to incentivise environmental outcomes. These include emissions allowances, carbon credits, biodiversity credits, nature-based credits and similar instruments. The research will focus primarily on environmental credits associated with government-sponsored, government-regulated or government-incentivised schemes, while also considering relevant voluntary market arrangements where they are significant to financial reporting. The exact scope will be refined during the desk-based research phase.

This project will strengthen the UKEB's evidence base on environmental credits and support future engagement with the IASB's developing work on pollutant pricing mechanisms and climate-related financial reporting.

PLEASE REFER TO THE INVITIATION TO TENDER (ITT) FOR FULL DETAILS.