On Wednesday morning the Chancellor of the UK, Rishi Sunak, reiterated at the start of COP26's Finance Day the UK's plan to become the "first ever net zero aligned financial centre".
As part of the Chancellors speech it was announced that the Glasgow Financial Alliance for Net Zero ("GFANZ"), which is chaired by Mark Carney, the former governor of the Bank of England, had brought together a green commitment from major financial institutions managing $130 trillion (£95 trillion) of combined assets (almost double the roughly $70 trillion when GFANZ launched in April 2021). The Chancellor stated that the intention is to "completely re-wire the entire global financial system for net zero" by facilitating the deployment of some of this private capital into a number of net zero friendly projects.
The commitment made by the 450 firms is to achieve net zero emissions by 2050 at the latest, deliver their fair share of 50% emission reductions this decade, and review their targets towards this every five years. All firms will report their progress and financed emissions annually.
As part of his speech, the Chancellor emphasised that the UK has a responsibility to lead the way on climate disclosures and announced that most big UK firms and financial institutions will be made to show how they intend to hit climate change targets by 2023 under new requirements, which will require them to set out a detailed public plan for how they will move to a low-carbon future - in line with the UK's 2050 net zero target. As part of this, the UK Government has developed a science-based ‘gold-standard' verification scheme for the plans, to safeguard against greenwashing. This scheme has been drawn up in collaboration with industry representatives, academics, regulators and civil society groups.
The UK is already set to become the first G20 country to enshrine in law a requirement to report on climate-related risks and opportunities, in line with recommendations from the Task Force on Climate-Related Financial Disclosures ("TCFD"). From 6 April 2022 c.1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis, which includes many of the UK’s largest traded companies, banks and insurers, as well as private companies with over 500 employees and £500 million in turnover.
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