During the COP26 climate conference in Glasgow, Chancellor Rishi Sunak announced that the UK Government will mandate financial institutions and UK-listed companies to disclose their strategies for achieving decarbonization and reaching net-zero emissions.
Sunak emphasized the UK’s ambition to establish itself as the world’s first Net Zero-aligned Financial Centre. The initial step will involve requiring asset managers, regulated asset owners, and publicly-listed companies to publish transition plans aligned with the government’s net-zero objectives, or to explain why they have not developed such plans.
While the government does not intend to prohibit investments in high-carbon sectors, it aims to enhance transparency and accountability regarding the actions firms plan to undertake. According to a government fact sheet, “It will be for the market to determine if these plans are adequate or credible.” The government encourages investors to utilize their stewardship to promote greater ambition and faster progress.
As frameworks for transition plans are developed, the government and regulatory bodies will work to include these standards in the UK’s Sustainability Disclosure Requirements, with the goal of enhancing consistency in disclosures and encouraging broader adoption by 2023. Sunak also announced intentions to legislate this initiative and establish a high-level “Transition Plan Taskforce” to oversee implementation, with a progress report expected by the end of 2022.