A regular briefing for the alternative asset management industry.
In a year when good news has been in very short supply, the last two weeks have offered several reasons to be more hopeful. Most notable, perhaps, was news that the Pfizer / BioNTech vaccine candidate had 90% efficacy in its Phase 3 tests (quickly followed by equally positive news from Moderna), giving hope that mass vaccinations next year could spell the end of COVID-19. Meanwhile, the US election result came with a pledge that a Biden-led administration will re-commit to the Paris Agreement on climate change, and take drastic action to reduce domestic emissions, just weeks after China announced that it would target carbon neutrality by 2060. It is self-evident that those announcements are huge: if the world is to tackle the climate crisis, commitments from China and the US are critical.
But, while Brexit negotiators worked away behind the scenes on a trade deal, the UK Government's vision for finance in a post-Brexit Britain also became clearer last week, and investors should take note. A number of significant announcements – timed to coincide with what would have been the first day of the UK-hosted COP 26 summit, the latest round of talks on implementation of the Paris Agreement – confirmed an ambition to be a leader in the green revolution. The specific pledges are likely to have very important consequences for asset managers, including those focused on alternatives, over the next five years and beyond.
Among the most eye-catching announcements was a commitment that the UK will be the first in the world to make reporting under the TCFD, the Taskforce on Climate-related Financial Disclosures, mandatory across the economy, and to develop a UK-specific version of the EU's forthcoming Taxonomy (essentially a classification system to identify sustainable investments).
the UK will be the first in the world to make reporting under the Taskforce on Climate-related Financial Disclosures mandatory