The U.K. government proposed mandatory disclosure of climate-related risks for listed companies and large asset owners beginning in 2022, as part of its green finance strategy announced Tuesday.
In efforts to "shift to a world at net zero emissions," HM Treasury and the Department for Business, Energy & Industrial Strategy are setting a new target to reach net zero greenhouse gas emissions by 2050 in a planned environment bill and 25-year environment plan.
The government wants to align mainstream financial flows from listed companies and asset owners with those that are environmentally sustainable, to redirect capital to green investments in cities, energy systems and land use around the world.
As part of the effort to boost disclosure of climate-related risks, U.K. regulators, chaired by government officials will examine the most effective way to approach disclosure, including exploring the appropriateness of mandatory reporting, the government said. The government expects all listed companies and large asset owners to disclose in line with the Task Force on Climate-related Financial Disclosures recommendations by 2022.
"We support the continued development of the U.K. as a global hub for green investment and recognize the important role that the investment management industry plays in building a more sustainable future by channeling finance from savers to companies and infrastructure projects," said Andrew Ninian, director of stewardship and corporate governance at the U.K. Investment Association, in an emailed response to the strategy announcement.
The green finance strategy is a first-step but it is not the end of the process, said Steve Waygood, chief responsible investment officer at Aviva Investors. "We look forward to engaging with policymakers in moving towards full, compulsory integration of TCFD recommendations within existing corporate governance, reporting frameworks or listing requirements," he said.
Such efforts, Mr. Waygood added, would "help position the U.K. as a global leader in creating a truly sustainable finance system."