The article in the url below reports on efforts by the UK government to increase its oversight of companies' sustainability efforts:
"The U.K. said that companies need to report the financial impacts of climate change on their businesses within the next five years, becoming the first country to make the disclosures mandatory as investors and governments demand corporations curb their greenhouse gas emissions."
Although this may seem obvious, it is actually an important step forward:
"Chancellor of the Exchequer Rishi Sunak, the country's equivalent to a U.S. Treasury secretary, said Monday that the rule would apply to most of the nation's economy, including listed companies, banks, large private businesses, insurers, asset managers and regulated pension funds."
This policy came directly from the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD, https://www.fsb-tcfd.org/, Chair Michael Bloomberg), an organization that was established in 2015 "to promote more informed decisions by companies":
"The TCFD says companies should disclose in their financial reports how climate change could increase or reduce sales, among other issues. As of this year, more than 1,500 organizations have expressed their support for the TCFD's recommendations, a more than 85% increase from last year, according to the TCFD's status report published late last month. The report said 42% of companies with a market capitalization above $10 billion disclosed at least some information in line with the TCFD."
The work of the TCFD is global, with implications for regulatory systems far beyond the UK:
"Investment houses that offer environmental funds welcomed the U.K.'s adoption of the TCFD. … The U.K.'s move comes as regulators in the U.S. have voiced support for the TCFD. Last month, Linda Lacewell, superintendent of the New York State Department of Financial Services, recommended that banks and insurers report through the TCFD. The DFS regulates around 1,500 banks, 1,800 insurers and other financial groups, with assets exceeding $7 trillion."
Together with the UK, other countries in the EU are moving further and faster than most:
"Like the European Union it recently exited, the U.K. has a net-zero emissions goal by 2050. To help meet that goal, Mr. Sunak also said the country would issue its first green bond next year under its new climate change agenda, following its European peers. Money raised by issuing a green bond is earmarked for climate and environmental projects. In early September, Germany raised 6.5 billion euros ($7.12 billion) via its debut green bond. The eurozone's green sovereign bond market, which the U.K. isn't part of, is still relatively small at less than around 1% of the region's overall bond market, but it is expanding since France's first green bond in January 2017."
There is additional reporting on this issue in the article in the second url below:
"The TFCD standards, to which the U.K. decision will lend weight, cover four main areas: governance, risk management, strategy and key metrics. While the disclosures are largely qualitative, their publication would likely push companies to incorporate climate risks into the financial numbers too. Big entities will need to comply first, followed by smaller ones over five years. By 2022, the U.K. government expects climate-risk reporting from all companies listed on the main market of the London Stock Exchange (excluding a high-growth submarket), half of its large private companies, 75% of U.K.-authorized asset managers and nearly all of its banks, insurers and large pension funds."
Most notably, the UK government felt compelled to intervene formally because previous efforts at voluntary compliance were not working:
"Progress on voluntary disclosure has been slow, even though over 1,500 companies and organizations 'support' [greater transparency on this issue]."
Take care
David
David Chandler
© Sage Publications, 2020
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
U.K. Requires Companies to Report on Climate Change by 2025
By Dieter Holger and Emese Bartha
November 9, 2020
The Wall Street Journal
U.K. Tries Climate Reports
By Rochelle Toplensky
November 18, 2020
The Wall Street Journal
Late Edition – Final
B14
