Share Action

Lack of Vision in Government's New Green Finance Strategy

Commenting on the publication of the Government's Green Investment Strategy, Lewis Johnston from ShareAction said:

“Today’s announcement is lacking the vision and ambition needed to align the financial sector with the Government’s own ambition of reaching net zero. We had hoped for something bold and visionary, but this amounts to little more than a restatement of existing commitments.

One step in the right direction is the government’s acknowledgement that pension scheme trustees’ fiduciary duties must be reviewed, and to work with the FCA, FRC and TPR to review the regulatory framework for stewardship.

Pension savers deserve to know that the people in charge of their money take a comprehensive view of their best interests, considering the full environmental and social impacts of their investments. We will work with the government to ensure that fiduciary duty is reformed in law to better reflect savers’ long-term best interests and sustainability preferences.

The strategy is right to say that reliable, transparent information is vital to align the financial sector with the UK’s climate commitments. However, the headline announcement on transparency is merely a commitment to ‘consult on the introduction of requirements for the UK’s biggest companies to publish their transition plans if they have them. What’s more, the consultation will assume such requirements may reflect the existing ‘comply or explain’ basis used by the FCA. This is not enough – we need robust, mandatory net-zero transition plans now so market participants can accurately assess performance and risk.

It is also vital that the Government introduces a science-based green taxonomy as soon as possible. We welcome the commitment to consulting on the taxonomy in Autumn, but given this consultation has already been delayed it is disappointing that the timeline isn’t more specific. We cannot afford any further delays to its introduction. Meanwhile, the consultation launched today on regulating ESG ratings providers is a positive step to guarantee standards in this somewhat ‘wild west’ area of the market.

Ultimately we need a complete transformation in how our financial system operates if we are to tackle the climate crisis. Whilst this strategy includes some positives – notably the acknowledgement that fiduciary duty needs to be reviewed – overall it is a missed opportunity to take the bold action we need.”

Notes to editors

ShareAction’s Policy Briefing sets out a full blueprint for what the Green Finance Strategy should have been.

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