B ig UK firms and financial institutions will be forced to show how they intend to hit climate change targets, under proposed Treasury rules.
In line with the UK’s 2050 net-zero target, financial institutions and companies with shares listed on the London Stock Exchange will have to set out the detailed public plans by 2023 on how they will move to a low-carbon future. The strategies will need to include targets to reduce greenhouse gas emissions, and steps which firms intend to take to get there.
A taskforce made up of industry leaders, academics, regulators and civil society groups will set a science-based “gold standard” for the plans in order to guard against so-called “greenwashing” where environmental initiatives are more about marketing than substance.
The plans will be published to increase transparency and accountability but at this stage, the government said they were not “making firm-level net-zero commitments mandatory” prompting some Green groups to say that plans didn’t go far enough. There are also concerns that firms and their shareholders will be left to decide how their businesses adapt to this transition, including how they intend to decarbonise.
Speaking at the COP26 climate summit, Chancellor Rishi Sunak claimed the UK was leading the world in becoming the “first-ever net zero aligned global financial centre”. He said the changes would mean “better and more consistent climate data; sovereign green bonds; mandatory sustainability disclosures; proper climate risk surveillance; and proper global reporting standards.”
In total, 450 firms controlling 40% of global financial assets (equivalent to £95tn) have agreed to commit to limit global warming to 1.5C above pre-industrial levels.
Senior economist at the campaign group Positive Money, David Barmes, said the intention was positive, but that financial firms were still “pouring billions into environmentally harmful projects.” He continued; “We need public institutions rather than bank chief executives to lead the way in setting standards and delivering green investment.”