Sustainability Disclosure Requirements
Sustainability disclosure requirements were announced by Rishi Sunak on 1st July at his Mansion House speech. The UK Government website states:
‘These new integrated Sustainability Disclosure Requirements will bring together and streamline existing climate reporting requirements and go further to ensure consumers and investors have the information they need to make informed investment decisions and drive positive environmental impact. The Government intends to legislate to deliver this and will set out its approach to green finance regulation ahead of COP26.’
These will apply to companies, pension schemes and financial services firms, at this stage which companies needing to report is unclear. However, it will be necessary for some companies to report on their impact and the impact of products they promote on climate and the environment, reporting on ways in which their activities could contribute to climate change. The framework is likely to include annual reports with entity-level disclosures relating to governance, strategy (including regarding scenario analysis), risk management and targets and metrics, and annual product and portfolio-level disclosures covering emissions and weighted average carbon intensity. Whilst there are currently few details about the timetable for implementation or the detail itself it appears more information will be forthcoming ahead of the COP26 Conference this November.
As the UK government reports ‘over 70% of people saying they want their investments to avoid harm and achieve good for people and the planet, the Government will also work with the Financial Conduct Authority (FCA) to create a new sustainable investment label – a quality stamp – so that consumers can clearly compare the impacts and sustainability of their investments for the first time’ the government intends the financial system to play a key role in contributing to the UK’s goal of achieving a net zero economy by 2050. In the run up to COP26, the UK seems keen to highlight its leadership in green finance and the adoption of new disclosure standards will be key to achieving this.
For more information please contact Tessa Laws.