UK Aims to be World’s First ‘Net-Zero Financial Centre’ With Green Finance Strategy
April 16, 2023
The UK Government recently published its new Green Finance Strategy, outlining its goal to become the world’s first net-zero financial centre. The strategy includes updates on greenhouse gas reporting, net-zero transition plans and associated disclosures, and the expected implementation of the International Sustainability Standards Board (ISSB) standards.
Key to the strategy is a promise that the UK government will provide transparency – delivering on commitments in Greening Finances: A Roadmap to Sustainable Investing by ensuring that investors have the data they need to make informed and sustainable investments.
In practice, this means that the UK is going to open a consultation on the introduction of requirements for its companies to disclose their net zero transition plans. The initial focus would be large companies in high-emitting sectors. A Transition Plan Task Force (TPT) has been working towards a ‘gold standard’ for disclosure of transition plans for some time. The consultation is expected in winter of this year.
Furthermore, in terms of disclosures, the government plans to launch a call for evidence on Scope 3 greenhouse gas (GHG) emissions reporting, to understand the benefits and drawbacks of reporting and accessing this kind of information. The strategy also includes plans to update Environmental Reporting Guidelines to provide more guidance on voluntary reporting of indirect emissions, or Scope 3 emissions.
The Strategy notes continued support of the International Sustainability Standards Board (ISSB), and commits to setting up a framework to assess the suitability of these standards for adoption in the UK in summer of 2023.
A final significant update in the strategy is the green finance taxonomy, which outlines investments considered ‘green’ by the government. While nuclear power generation has been confirmed as green, other activities are still under consideration, and the taxonomy is being further developed.
The UK government’s growing interest in sustainability reporting mechanisms in various areas aims to drive positive change in the financial industry in particular, promoting transparency, efficiency, and accountability.
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