On 18 October 2021, the HM Treasury published a policy paper titled, ‘Greening Finance: A Roadmap to Sustainable Investing’.
The policy paper refers to the government’s long-term goal to green the financial system and align it with the UK’s net-zero commitment. Greening the financial system will be carried out through three phases:
- informing investors and consumers;
- acting on the information; and
- shifting financial flows
The policy paper sets out a Roadmap covering the government’s strategy to deliver phase 1.
Central to phase 1 are the new economy-wide sustainability disclosure requirements (SDT). The Roadmap sets out implementation pathways for different sectors of the economy and provides more detail on the requirements. The SDR will cover three types of disclosures which are: corporate disclosure, asset manager and asset owner disclosure, and investment product disclosure. The requirements will mean that businesses must start disclosing their environmental impact and they will also apply to pension schemes, investment products and asset managers and owners.
The Roadmap also sets out further detail on the UK green taxonomy, highlights the importance of investor stewardship in green finance and reaffirms the UK’s commitment to international leadership on green finance.
The government will update the Green Finance Strategy in 2022 which will assess progress on phases one and two.