Companies will be forced to publish net zero plans

A series of measures to make financial institutions more environmentally friendly will be announced on Wednesday (Picture: Getty)

Financial institutions and listed companies will be made to publish plans on how they will transition to net zero.

Chancellor Rishi Sunak laid out the reforms at the Cop26 climate summit on Wednesday, pledging an ambition to end ‘greenwashing’.

He says he plans to make the UK a net zero financial centre – but he was accused of using a marketing slogan rather than ‘transformative action’.

Speaking in Glasgow, Mr Sunak outlined how new rules will be drawn up by a task force including representatives from universities, civil society groups, industry and regulators.

The plans will need to include ambitious targets to reduce greenhouse gas emissions, the steps companies plan to take to get there and milestones ahead of 2050 – but do not force companies to get to net zero.

The plans will need to be published but the aim is simply to increase transparency.

Mr Sunak told the conference in Glasgow that more public investment is needed to fight climate change, but that governments also need help from the private sector.

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‘Public investment alone isn’t enough, so our second action is to mobilise private finance’, he said as the conference’s finance day kicked off.

The Chancellor announced that financial institutions controlling 40% of global assets will align themselves to the Paris Agreement’s 1.5C limit for global warming.

‘We are accelerating three actions today’, he said.

‘First, we need increased public investment. And I want to speak directly to the developing countries of the world… the G20 is stepping up to provide debt treatments more swiftly.’

Mr Sunak promised £100 million to a task force on access to climate finance, and support for billions of new green bonds in the UK to fund renewable energy in developing countries.

Rishi Sunak arrived at COP26 with a Green Budget Box (Picture: Getty Images)

He went on: ‘Our third action is to rewire the entire global financial system for net zero. Better and more consistent climate data, sovereign green bonds, mandatory sustainability disclosures, proper climate risk surveillance, stronger global reporting standards: all things we need to deliver.’

The initiatives follows heavy criticism for the Chancellor’s green credentials in the budget, when he reduced the cost of domestic flights around the UK.

And environmentalists quickly piled in to again criticise Mr Sunak’s approach to the climate.

Charlie Kronick, senior climate adviser at Greenpeace UK, said: ‘This Cop demands transformative action in the financial sector but the chancellor has arrived with a marketing slogan’, The Guardian reported.

‘The world’s first net zero aligned financial centre would be one in which financial institutions and companies are required by law at the outset to bring their lending and investments in line with the global goal to limit warming to 1.5C.

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‘Instead, these new rules seem to allow plenty of wiggle room for financial institutions to continue with business as usual, rather than “rewiring” the system as the chancellor claims.

‘Transition pathways must be genuinely science-based, not determined by what industry participants in cosy alliances consider best practice at any given time. The chancellor is once again falling short of what the climate emergency requires.’

As finance ministers from across the world meet in Glasgow, Mr Sunak claims the plans will be a greenwashing-proof new ‘gold standard’, which will not allow companies to boast about their eco ambitions without backing them up with action.

But the Government will leave it up to the market to determine if transition plans put forward by firms are adequate or credible.

Companies will be expected to start publishing their transition plans in 2023.

Meanwhile, the Chancellor was confronted by young activists from the climate group Green New Deal Rising, who accused him of banning them from his talk after they questioned him about subsidising fossil fuels.

Earlier, the Prime Minister acknowledged that the issue of climate finance had yet to be resolved – despite a 10 billion dollar (£7.3 billion) commitment from Japan over five years.

Mr Johnson said the richer nations were still behind on a commitment first made at Paris in 2015 to transfer 100 billion dollars (£73 billion) a year to developing countries to support sustainable development and mitigate the inevitable effects of global warming.

But there have been widespread complaints that vulnerable nations are yet to see any of that money.

Mr Johnson was returning to London by plane after the end of the two-day leaders’ event which opened the summit, but he made it clear he would continue to be engaged.

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