Financial services firms representing more than £10trn in assets under management have called on the UK government to up their climate and diversity policies ahead of COP26 this November.
The UK Sustainable Investment and Finance Association (UKSIF), a membership organisation representing more than 260 investment managers, pension funds, banks, financial advisers, research providers and NGOs, has today published a policy vision, A new vision for sustainable finance, outlining areas for policy solutions to climate change, biodiversity loss, lack of diversity and more.
Among these are calls for the UK government to explore sustainability-linked bonds, a move UKSIF said would “show real leadership, particularly as the UK has been relatively late on the international stage in introducing green gilts”.
The paper also calls for a UK Taxonomy, which has been flagged by the government as a future plan, and improvements to the Taskforce on Climate-related Financial Disclosures, including creating a consistent format for reports, requiring more detailed disclosure, and more incentives for companies to align with it.
It asks for better stewardship policy from government, including changes to the listings regime and reform of the audit market.
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When it comes to net zero, UKSIF also wants clarity from the government on what this means for each sector, as well as asking business leaders to set interim targets, and shareholders to turn voting attention to climate issues. Carbon pricing should also be more explicitly integrated into the UK’s tax system.
“We welcome Treasury’s recent announcement on ensuring the mandates of financial regulators have regard to the UK’s net-zero target, and would support HMT making a similar commitment to apply this to its policymaking,” it said.
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Nature-related financial disclosures
On biodiversity, UKSIF said it supports calls for the government’s new proposals to tackle deforestation in supply chains to be expanded to all harmful deforestation activity, not just those defined as illegal.
But it said improving our collective understanding of biodiversity is a priority, including identifying the most impactful biodiversity issues investors should know. UKSIF supports the UK to take a prominent role to shape the Taskforce on Nature-related Financial Disclosures when it launches this year and embed this.
Collective understanding and use of language is also necessary when it comes to ensuring a Just Transition, for the which UKSIF has also requested the government set up a new commission.
Turning to diversity, UKSIF and its members support the government mandating ethnicity pay gap disclosures and want to see better diversity disclosure and reporting from companies in general, as well as more targets set by the government.
James Alexander (pictured), CEO of UKSIF, said: “UKSIF’s Policy Vision demonstrates that the UK sustainable finance sector is prepared to play its part and highlights the unique opportunity the government has to enhance the UK’s global leadership on sustainable finance.
“We stand ready to work with government and others to shape the future success of this vital industry and embed the ambitious recommendations we have outlined, from the future of sustainable finance standards to net-zero pathways and biodiversity.”
