UK Government publishes roadmap setting out details on new sustainability disclosure requirements
20 Oct, 2021
The UK Government has published a roadmap setting out details of new economy-wide sustainability disclosure requirements, and the legislative and regulatory changes that will be made to deliver them. These will, for the first time, bring together UK sustainability reporting requirements under one integrated framework. The roadmap emphasises the need for high-quality, reliable, and internationally comparable sustainability information. This is necessary to improve decision-making, build trust and address risks of greenwashing.
In 2019 the Government announced its Green Finance Strategy which recognises the role of the financial sector in delivering global and domestic climate and environmental objectives.
Further to the implementation of the Green Finance Strategy, the 'Greening finance: A Roadmap to Sustainable Investing' roadmap represents the government's strategy to address the information gap for market participants, ensuring a flow of decision-useful information on environmental sustainability. Central to this is a set of new economy-wide Sustainability Disclosure Requirements ("the SDR") for companies, asset managers and owners and investment products. The SDR will bring together new and existing sustainability reporting requirements for businesses, the financial sector and investment products, allowing sustainability information to flow from companies to the financial sector and its financial products.
The SDR aims to ensure that consumers and investors have all the information they need to make investment decisions that drive a positive environmental impact. This includes requiring, for the first time, every investment product to set out the environmental impact of the activities it finances, and justify clearly any sustainability claims it makes. Asset managers will also need to set out how they incorporate sustainability into their investment strategy to allow consumers to make informed judgements about the kind of firms they want to invest in.
The roadmap also sets out more details on a new green finance rulebook, the UK Green Taxonomy, which will create a shared understanding of which economic activities count as green. Relevant companies and financial products will be required to report their environmental impact against the UK Green Taxonomy. Consultation on this is expected in early 2022.
The roadmap highlights the importance of investor stewardship in green finance, sets out the government’s expectations in that area and reiterates the UK's commitment to international leadership on green finance. It also acknowledges that a comprehensive long-term view is needed to help ensure that the UK meets its climate and environmental objectives. The government will therefore update its Green Finance Strategy in 2022.
The roadmap can be accessed on the HM Treasury website here. Our related Need to know publication is here.
