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Most large UK firms must show by 2023 how they plan to reach climate change targets under new Treasury rules. Importantly, detailed plans on low-carbon futures must be made public in line with the UK’s 2050 net zero target.
Chancellor Rishi Sunak announced the new rules in a COP26 climate summit speech. During his message, he highlighted the UK’s vision to become the “first-ever net-zero aligned global financial centre.”
Under new regulations, firms and financial institutions must publicly disclose detailed plans showing their transition to a low-carbon future. They’ll also have to disclose how they plan to adhere to the UK’s 2050 net zero targets.
Chancellor Rishi Sunak claimed the UK was leading the world in becoming the “first-ever net zero aligned global financial centre”.
He said the changes would mean: “Better and more consistent climate data; sovereign green bonds; mandatory sustainability disclosures; proper climate risk surveillance; and proper global reporting standards.” In total, 450 firms controlling 40% of global financial assets – equivalent to $130tn (£95tn) – have agreed to commit to limit global warming to 1.5C above pre-industrial levels.
According to research by the British Business Bank, almost a third (30%) of all current UK greenhouse gas emissions come from UK businesses. Smaller businesses account for half of UK-business driven emissions, the same proportion as larger businesses.
The Government will expect firms to start publishing transition plans in 2023 and intends to legislate to deliver this.
Firms will be able to decide how they plan to decarbonise their emissions, including how to set overall targets. A good transition plan will set out these decisions in a comparable way and quantify the interim targets and milestones to meet the overall firm-level goal.
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