UK firms must reveal path to net zero by 2023
Most large firms and financial institutions in the UK must show by 2023 how they plan to reach climate change targets under new Treasury rules. Detailed plans on their low-carbon futures will have to be made public in line with the UK’s net zero target by 2050.
Chancellor Rishi Sunak announced the new rules in a COP26 climate summit speech, adding that it is the vision for the UK to lead the world in becoming the “first-ever net zero aligned global financial centre.”
In the new rules, firms and financial institutions will have to disclose publicly a detailed plan that shows how they will transition to a low-carbon future in line with the UK’s 2050 net zero targets.
Read more: “Net Zero Jargon Buster”
The plans will be submitted to an expert panel for review to ensure that they are not just “spin.”
It is said that any commitments will not be mandatory, which climate groups decry. The Treasury argues that the market will decide if firms’ plans are credible.
It is reported that 450 firms who control 40 per cent of global financial assets, which is equivalent to £95 trillion, have agreed to commitments to limit global warming to 1.5 Celsius above pre-industrial levels.
The news rules announced during COP26 come a week after the UK government announced that big businesses, large asset managers, and institutional investors must reveal sustainability credentials under a refreshed green reporting regime. These rules state that an investment product will now have to set out the environmental impact of the activities it finances through the new sustainability disclosure requirements (SDR).
The implication for businesses is that they will have to justify all sustainability claims that generate from an investment. Businesses will also need to tell investors how they are focusing on green investments in their strategy.
Businesses are increasingly being put into a significant position to help the UK deliver on its net zero targets. Policies, subsidies, and legislation encouraging businesses to decarbonise are a likely outcome of COP26.
The slate of new green rules from the UK means that firms and their shareholders must decide how their businesses will adapt and transition to a low-carbon economy.
If you are looking for carbon and sustainability assessment for your business, visit our service page here or give us a call at +44 (0)3 300 300 800.