Ministers delay plans to force UK companies to disclose environment

Ministers took the last-minute decision to withdraw plans to require major UK businesses and asset managers to disclose their environmental impact from the Queen’s Speech on Tuesday, government sources say.

The move to remove ‘sustainability disclosure requirements’ from a new financial services bill comes as the government more broadly backs away from tightening corporate governance.

Other measures postponed – partly at the request of David Canzini, deputy chief of staff at Downing Street – included audit reforms, increased powers for the internet regulator and the regulation of professional football.

The Treasury said it “remains committed to implementing the sustainability disclosure requirement and will proceed with the necessary legislation in due course.”

Chancellor Rishi Sunak announced in October that major UK companies, investment groups and pension schemes should start disclosing the environmental impact of their activities.

The SDRs will require companies to “clearly” substantiate their sustainability claims while setting out their transition plans to help achieve the UK’s goal of becoming net zero carbon by 2050.

They will cover disclosure rules for investment products, asset managers and owners and listed companies.

The government has said it will allow these corporate reporting standards to be set in conjunction with the International Financial Reporting Standards Foundation, an international body that is developing its own climate-related standard.

Although ministers never announced the SDR legislation would feature in the Financial Services Bill or the wider Queen’s Speech, they hoped to do so privately until the end of the week. last.

An aide said there had been a last minute U-turn: ‘I would see this in the context of Downing Street not wanting to impose new regulations on business at this stage.

Canzini, who is said to have strong free-market instincts, told his aides to drop or postpone policies that could be considered “unconservative” in order to differentiate the party from Labour.

Government officials said “the best vehicle to deliver” the DTS had yet to be decided.

They said the Financial Services Bill was already a cumbersome piece of legislation that could get bogged down in parliament if it got any longer.

Officials pointed out that progress was still being made under the auspices of the Department for Business, Energy and Industrial Strategy and the Financial Conduct Authority, for example moving towards mandatory disclosure of the planning of the transition for financial companies. However, they confirmed that legislation would eventually be needed for the new system.

The Government’s Transition Plan Task Force will create the framework for companies to disclose their plans for transitioning to net zero. He launched a call for testimonials this week.

Ed Miliband, shadow energy secretary, said the government was backing away from commitments just six months after hosting the COP26 global climate talks in Glasgow. “Government backtracking on this is the wrong choice and is holding back the UK’s and the world’s green transition.”

Heather McKay, policy adviser for sustainable finance at think tank E3G, said the Queen’s Speech had been “a bit of a wet squib” in tackling climate change.

“There was real potential with the Financial Services Bill to underpin this green economic firework of innovation around how we manage climate risk in the UK.”

The Treasury insisted the UK was always at the forefront of efforts to ensure corporate environmental disclosure.

“The UK was the first major economy to commit to mandatory climate reporting and we have delivered on that commitment by establishing a comprehensive regime this year,” the department said. “Today we also launched a call for evidence to develop the gold standard for transition planning, helping to deliver on our ambition to make the UK the first net zero aligned financial center in the world. “

Video: “Net zero will not change the way we live”

Comments are closed.