Certain large businesses will need to set out their green
credentials to potential investors under new world-leading
reporting rules outlined by the Chancellor today.
The new requirements, which will also apply to pension schemes,
investment products and asset managers and owners, are part of
the government’s landmark reforms to create a greener financial
system.
Around 70 per cent of the UK public want their money to go
towards making a positive difference to people or planet. But the
lack of common definitions around environmental sustainability is
leading to greenwashing, misleading investors and consumers about
how green a product really is.
The new Sustainability Disclosure Requirements (SDR) will ensure
investors have the information they need to make informed
decisions about where to put their money.
Following the publication of a new report setting out
further details of how SDRs will work, the Chancellor
said:
We are already a world leader in green finance, and today’s
roadmap will give us the opportunity to set new global standards
for sustainability that will boost the economy, protect the
planet and support our net zero goals.
We want sustainability to be a key component of investment
decisions, and our plans will arm investors with the right
information to make more environmentally-led decisions
The report, entitled Greening Finance: A
Roadmap to Sustainable Investing, comes ahead of the UK
hosting COP26 next month and is part of the Chancellor’s plan for
the UK to lead the world in green finance and sustainable
investing.
The roadmap outlines the legislative and regulatory changes that
will be made across the economy to arm investors and consumers
with the right information by setting world-leading standards on
environmental sustainability reporting.
First announced at the Chancellor’s Mansion House speech earlier
in the year, the new integrated regime will bring together and
streamline existing climate reporting requirements – such as the
UK’s commitment to implement mandatory reporting aligned with the
Task Force on Climate-Related Financial Disclosures (TCFD) – and
go further.
This will ensure consumers and investors have all the information
they need to make investment decisions that drive a positive
environmental impact.
This includes requiring every investment product to set out – for
the first time – the environmental impact of the activities it
finances, and justify clearly any sustainability claims it makes.
Asset managers will also need to set out how they incorporate
sustainability into their investment strategy to allow consumers
to make informed judgements about the kind of firms they want to
invest in.
SDR will also set out expectations for certain firms around the
publication of transition plans in the context of the UK’s net
zero commitment.
The Roadmap also sets out more details on a new green finance
rulebook - the UK Green Taxonomy - which will create a shared
understanding of which economic activities count as green.
Relevant companies and financial products will be required to
report their environmental impact against the UK Green Taxonomy.
The Roadmap also acts as a call to action for the pensions and
investment sector, setting expectations that they will use the
information generated by the SDR to start shifting financial
flows to align with a net zero economy.
Specific reporting requirements, including scope, timing and
detail, will be developed following public consultation.
Further information:
Greening Finance: A
Roadmap to Sustainable has been published.
