Companies to report climate impact under new Government rules
Chancellor Rishi Sunak is expected to force British companies to reveal the impact they are having on the environment, as the Government races to meet its net zero by 2050 target.
UK-based firms will soon have to ensure that they provide thorough reports to shareholders, which will allow investors to direct their money to more climate-friendly firms, or to track improvements.
Companies will have until 2025 to get in line with the rules, which will be based on proposals from the Task Force on Climate-related Financial Disclosures (TCFD), according to sources close to discussions.
Last year the Government adopted a commitment to ensure that the UK is emissions net zero by the middle of the century.
The shift away from polluting fuels will require a major reset of the UK’s economy, including plans to get petrol and diesel cars off the roads, and greatly expand the use of wind and solar power.
Critics have taken aim at the Chancellor in recent months for not including climate requirements from companies that have been kept afloat by the Government support during the Covid-19 pandemic.
However, on Monday Bank of England Governor Andrew Bailey said that the Government had been right not to tie the rescue with green targets.
“In the face of such an emergency in all conscience it was not right to say to people that they would be denied a livelihood because their employment was of the wrong sort for the climate,” he said.
He added: “What we cannot measure we cannot manage, so it is important that financial firms and their clients use the TCFD framework and the latest tools available to measure, model and disclose the climate risks and opportunities they are exposed to today and in different future climate scenarios.
“We at the Bank started to do this ourselves when we published our own climate disclosure this summer.
“We are now working with the Treasury and other regulators to consider the UK’s approach to climate disclosure.”
The global climate agenda was boosted this month with the election of Joe Biden as the next US president.
Mr Biden has pledged strong action on climate change, after his predecessor Donald Trump removed the country from the Paris Climate Agreement.
Many global leaders, including UK Prime Minister Boris Johnson, spoke about climate change while congratulating Mr Biden on his victory over the weekend.