Greening Finance: A Roadmap to Sustainable Investing

The Treasury’s new report

Greening Finance:
A Roadmap to Sustainable Investing

The Treasury’s new report

Building on the foundations set out in the 2019 Green Finance Strategy, the Treasury published a new report: Greening Finance: A Roadmap to Sustainable Investing.

This is a detailed roadmap designed to outline the actions the UK government and regulators are taking, in partnership with the private sector, to close the information gap for market participants on sustainability.

The roadmap has four key objectives:

Implementing Sustainability Disclosures Requirements (SDR) across the economy – introducing disclosures incrementally as new regulatory or legislative measures come into force.
Delivering a UK Green Taxonomy and ensuring it has been road-tested in the market as a useful investment tool.
Lowering the barriers to investors acting as effective and responsible stewards of capital.
Leading international efforts to bring about global and systematic change in the financial system.

The Treasury views the transition to a greener future of finance being split into the following three phases, with the roadmap representing the government’s strategy to deliver on only phase 1: 

Phase 1:  Informing investors & consumers: Addressing the information gap for market participants and ensuring a flow of decision-useful information on environmental sustainability from corporates to financial market participants.  

Phase 2:  Acting on the information: Creating expectations and requirements that this sustainability information is mainstreamed into business and financial decisions, for example in risk management and investor stewardship.

Phase 3:  Shifting financial flows: Ensuring that financial flows across the economy shift to align with the UK’s net zero commitment and wider environmental goals. 

As COP26 approaches, the UK’s investment management industry is in a pivotal position to support the transition to a net zero economy. The IA has therefore welcomed the publication of this roadmap, which sets out a clear timescale for introducing economy wide sustainability-related disclosures.

In particular, the IA is encouraged to see the emphasis on addressing the data gaps and the flow of sustainability information from investee companies through to investment managers and to consumers.

This supports the responsible allocation of capital and ensures that savers have clarity, confidence, and choice when investing. It is also positive to see the emphasis on investors’ role as stewards of their clients capital in achieving this ambitious but critical green finance agenda.

The roadmap also highlights the UK’s influential position, holding both the G7 presidency and hosting COP26, to drive progress in both bilateral and multilateral fora.   

For more information, please contact daryl.kennedy@theia.org

Ultimately, strong and coherent policy to align all sectors in which our industry invests with the UK’s net zero commitment is vital, and we support the update to the Green Finance Plan in 2022, with more detailed sectoral transition pathways.

We look forward to working closely with industry, the government, regulators and our clients to implement these proposals, which will underpin efforts to address climate change with the urgency that it demands.