6.03 The climate governance description says the Audit Committee reports on climate [wording masked], and also that it joins the quarterly reporting only from the start of 2026
UK Company C · an AIM-quoted scientific instruments group · Presentation point
In brief
The law requires a description of the company's governance arrangements for climate-related risks. Figure 1 says the Audit Committee identifies climate risks each year and reports its findings [wording masked]; the next page says the Audit Committee joins the [wording masked] only from the start of 2026, and the risk section says subsidiary climate risks are submitted to it from 2026. The statement does record climate work by the Audit Committee in 2025 (it reviewed the [date] climate risk workshop), but it does not say how often, if at all, the Committee reported to the Board on climate during 2025.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2025, page 33; Annual Report 2024, page 33; Annual Report 2025, page 34; Annual Report 2025, page 35; Annual Report 2025, page 50. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Figure 1: Audit Committee reports [wording masked]'; page 34: Audit Committee in the formal quarterly updates 'from the start of 2026', and '[wording masked]; page 35: subsidiary risks submitted to the Audit Committee 'from the start of 2026'. | What the rule requires One description of how the Audit Committee oversaw climate-related risks in 2025 and how often it reported to the Board, with the changes from 2026 set out separately. |
The rule
Companies Act 2006 s.414CB(2A)(a)
Version relied on: Companies Act 2006, revised text on legislation.gov.uk as in force for the financial year reviewed
a description of the company’s governance arrangements in relation to assessing and managing climate-related risks and opportunities
Why it applies here: the statement mixes the arrangements in place in 2025 with those adopted for 2026, so a reader cannot tell whether the Audit Committee reported to the Board on climate quarterly during 2025, as Figure 1 says, or only from 2026, as pages 34 and 35 say.
Why it matters
The governance part of the climate-related financial disclosures does not tell a reader how often the Audit Committee reported to the Board on climate during 2025, as opposed to from 2026.
Exposure
A narrative inconsistency in a required description; no sanction attaches, though the Financial Reporting Council (FRC) has reviewed climate disclosures of AIM companies.
Our workings
Figure 1 describes the Audit Committee as collaborating with the external adviser to identify climate-related risks annually and reporting its findings [wording masked]. Page [n] says the Executive Committee engages with the Sustainability Committee and, from the start of 2026, the Audit Committee, and provides [wording masked], and that [wording masked]; the same page records that the [wording masked] in 2025. Page [n] says subsidiary climate risks are aggregated by Group finance and, from the start of 2026, [wording masked] Audit Committee report lists climate-related risk among its duties. The 2024 report already said [wording masked], including climate disclosure compliance, to the Audit Committee.
Management’s best defence, and our reply
The company could say Figure 1 shows the arrangements as they now stand, approved during the reporting cycle, while the narrative explains that some of them started in 2026, and that the Audit Committee did review the climate risk workshop in 2025. It could add that the Board itself discussed climate four times in 2025, so oversight did not depend on the Audit Committee. However, Figure 1 is presented within the statement for 2025 without any date, and the statement says both that the Audit Committee reported at least quarterly and that it joined the quarterly reporting only in 2026, which cannot both describe 2025.
The fix
- Describe the 2025 arrangements as they operated (what the Audit Committee reviewed and how often it reported to the Board) and set out separately the changes from 2026, dating Figure 1.
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | Figure 1: the Audit Committee reports on climate at least quarterly | Document | Annual Report 2025, page 33 |
| 2 | The Audit Committee joins the quarterly updates only from 2026 | Document | Annual Report 2025, page 34 |
| 3 | Role described as new | Document | Annual Report 2025, page 34 |
| 4 | Subsidiary climate risks reach the Audit Committee only from 2026 | Document | Annual Report 2025, page 35 |
| 5 | The statement records climate work by the Audit Committee in 2025 | Document | Annual Report 2025, page 34 |
| 6 | Audit Committee report lists climate-related risk among its duties | Document | Annual Report 2025, page 50 |
| 7 | The 2024 report already gave the Audit Committee a climate role | Document | Annual Report 2024, page 33 |
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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