UK Considering Mandatory Climate-Related Financial Disclosure
Under a proposed new Green Finance Strategy announced this week the UK Government expects listed companies and large asset owners to disclose the impact of climate change on their businesses from 2022.
The Treasury is considering the most effective way of ensuring that this disclosure happens, including, if necessary, requiring mandatory disclosure. The Green Finance Strategy intends to encourage investment in more sustainable projects and green ventures by putting the environment at the centre of decision making through public disclosure of climate impact.
In a strategy paper the government highlights the work already done by the UK’s financial regulators on climate risk, including a Financial Conduct Authority (FCA) discussion paper in 2018 on the value of introducing a requirement for financial services to report on how they manage these risks.
However, the UK Government believes more needs to be done, and quickly, to achieve the aims of the green finance strategy. The paper also rightly points out that a joint taskforce of regulators is essential to ensuring a co-ordinated approach to climate-related financial issues, and that disclosures must be in line with international standards so disclosure is internationally comparable.
Read more on the Green Finance Strategy and current guidance on climate-disclosure from UK regulators here.