Most big UK firms and financial institutions will be forced to show how they intend to hit climate change targets, under proposed Treasury rules. By 2023, they will have to set out detailed public plans for how they will move to a low-carbon future – in line with the UK’s 2050 net-zero target.
Plans will be submitted to an expert panel to ensure they are not just spin. But net-zero commitments will not be mandatory and green groups say the proposals do not go far enough. Firms and their shareholders will be left to decide how their businesses adapt to this transition, including how they intend to decarbonise the emissions they finance.
On the third day of the COP26 climate summit in Glasgow, Chancellor Rishi Sunak will outline the move to make the UK the first net-zero financial centre He will address an audience of finance ministers, central bank governors, heads of multilateral financial institutions and senior industry leaders, as part of a day dedicated to finance.
The chancellor will also announce that 450 firms controlling 40% of global financial assets – equivalent to $130 trillion (£95tn) – have now aligned themselves to limit global warming to 1.5C above pre-industrial levels. He will say advances have been made to “rewire the entire global financial system for net zero” under the UK’s leadership of the conference.
Net Zero Transition plan by 2023
Under the new Treasury rules, financial institutions and companies with shares listed on the London Stock Exchange must come up with net-zero transition plans, which will be published from 2023.
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 also be set up by the government. It 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.
However, the government said there was “not yet a commonly agreed standard for what a good quality transition plan looks like”.
And although the plans will need to be published, the government said “the aim is to increase transparency and accountability” and the UK was not “making firm-level net-zero commitments mandatory”.
Meanwhile, Mr Sunak is also expected to pledge that a target for developed countries to send $100bn (£720m) a year to those that are less developed – to help support their transition to net zero – will be achieved by 2023.
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