U.K. Could Force Companies to Detail Net-Zero Roadmaps
(Bloomberg) -- The U.K. could become the first country to require private companies to show in detail how they will reach net-zero targets as part of a new green investment strategy.
The so-called Greening Finance plan, backed by the Treasury, Business Department and Bank of England, could be unveiled as soon as next week, according to people familiar with the matter, as the country prepares to host COP26 climate negotiations.
While a growing number of companies and financial institutions have committed to net zero emissions by 2050 -- in line with the U.K. government’s own goal, few have mapped out in detail how they plan to reach it. Forcing companies to provide details will help investors -- who are also under pressure to reach targets across their portfolios -- and drive funds into greener industries.
According to a draft document seen by Bloomberg, the government will consult with companies by 2022 on requiring corporate transition plans. As a first step, “certain firms” will have to publish transition plans on reaching net zero by 2050, or “provide an explanation if they have not done so.” Standards will then be folded into regulation over the next two to three years. The rules initially will apply to big companies, with others included subject to consultation.
Read: Global Financiers Call for Government Help to Meet Climate Goals
“Given the indicative pathways, organizations should consider taking the necessary steps now to build their capabilities and refine their data and the resulting disclosures,” the draft document says.
The Treasury didn’t respond to a request for comment. The Business Department said it had been speaking to stakeholders about climate disclosures.
“We have consulted on proposals to mandate climate-related financial disclosures by publicly quoted companies and are carefully considering the responses. We will publish a response in due course,” BEIS said in an e-mailed response to questions.
Earlier this week, a group of U.K. businesses and investors including Aviva Plc, BT Group Plc and Tesco Plc called for mandatory disclosure of net-zero plans by 2025. As the U.K. prepares for crucial climate talks at government level in Glasgow, Scotland at the end of this month, it’s also pushing for initiatives in the private sector to help mobilize investment and reduce emissions across the economy.
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