UK government publishes 2023 Green Finance Strategy

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03 Apr, 2023

The UK government has published a new policy paper, Green Finance Strategy - Mobilising Green Investment (“the 2023 Strategy”), building on the previous Green Finance Strategy which was published in July 2019. The 2023 Strategy sets out the government’s updated plans for the UK to become the world’s first net zero-aligned financial centre, including five key objectives addressing UK financial services growth and competitiveness, investment in the green economy, financial stability, incorporation of nature and adaptation and alignment of financial flows with climate and nature objectives.

The 2023 Strategy re-emphasises the government’s commitment to the sustainability disclosure requirements (SDR) set out in its Greening Finance Roadmap, published in October 2021, including its support for UK adoption of the standards being finalised by the International Sustainability Standards Board (ISSB) and the development of an endorsement mechanism. The SDR aims to create a streamlined disclosure framework bringing together new and existing sustainability reporting disclosure requirements for UK businesses, the financial sector and investment products.

The UK has already taken a number of steps in developing the SDR, including the Financial Conduct Authority (FCA)’s Listing Rule for premium and standard listed companies to make disclosures consistent with the Task Force on Climate-related Financial Disclosure (TCFD) Recommendations, and government legislation to require certain AIM-listed and unlisted companies and LLPs to include climate-related financial disclosures in the annual report. TCFD reporting requirements have also been introduced for asset managers, life insurers, FCA-regulated pension providers and occupational pension schemes.

The government aims to introduce the SDR in a way that complements the UK’s wider non-financial reporting framework, minimises duplication with other forms of corporate reporting and gives businesses enough time to implement the new requirements. To this end, the 2023 Strategy confirms that the government will be carrying out a broader review of the UK’s non-financial reporting framework, beginning with a call for evidence requesting stakeholder views on how best to achieve these aims.

The 2023 Strategy sets out plans to implement four key components of the SDR:

  • Disclosure of transition plans.
  • IFRS Sustainability Disclosure Standards developed by the ISSB.
  • Company reporting of GHG emissions, nature-related financial risks and impacts, and physical climate risks.
  • Fund labels and the FCA’s approach to the SDR.

The 2023 Strategy also sets out plans to develop and consult on a UK Green Taxonomy to promote transparency and help to direct investment towards sustainable businesses.

The 2023 Strategy can be found on the government website here.  Our related Need to know publication is available here.

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