Source · Select Committees · Environmental Audit Committee
First Report - The financial sector and the UK's net zero transition
Environmental Audit Committee
HC 277
Published 29 November 2023
Recommendations
8
Deferred
Para 68
Current 'comply or explain' transition plan disclosure rules are insufficient.
Recommendation
We welcome the Government’s intention to consult on requiring companies to disclose transition plans. However, the current “comply or explain” basis should be for an interim period only: a company can disclose by simply not having a transition plan, defeating …
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Government Response Summary
The government is supporting the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK's approach to transition plans and the role of the TPT's Disclosure Framework, without committing to ending 'comply or explain'.
9
Deferred
Para 69
Deferring mandatory transition planning risks UK's green finance leadership position.
Recommendation
We agree with the Government that the operating environment will become increasingly difficult for those firms that do not set out their plans for contributing to net zero. However, we do not think it is enough to leave the issue …
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Government Response Summary
The government established the Transition Plan Taskforce (TPT) to create a gold standard for private sector climate transition plans and will hold an upcoming consultation to consider the UK’s approach, including the TPT’s Disclosure Framework.
10
Deferred
Para 70
Mandate companies to develop and disclose transition plans in government consultation.
Recommendation
The Government’s consultation on requiring companies to disclose transition plans should include consideration of making it compulsory to have and to disclose a transition plan—not just if a company happens to have one—and the most suitable timetable for doing so. …
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Government Response Summary
The government details existing work by the Transition Plan Taskforce and the FCA on transition plan disclosures. They state an upcoming consultation will consider the UK’s approach to transition plans, including the TPT Disclosure Framework and endorsement of ISSB standards, which will inform future policy but does not explicitly commit to making it compulsory to *have* a plan or mandatory reporting as the ultimate aim.
11
Deferred
Para 88
Introduce regulations ensuring companies follow Transition Plan Taskforce guidance for disclosures.
Recommendation
We welcome the publication of the Transition Plan Taskforce’s disclosure framework for transition plans, and the steps taken to achieve international alignment of that framework. We believe that those who publish transition plans should follow a compulsory framework, to ensure …
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Government Response Summary
The government established the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK’s approach to transition plans and the role of the TPT’s Disclosure Framework, without committing to introducing regulations for compliance.
12
Deferred
Para 89
Set out consistent regulatory expectations and establish independent monitoring for organisations' net zero transition plans.
Recommendation
A plan is only effective if it delivers its contents. The Government should set out simple, consistent regulatory expectations for net zero transition plans and establish an independent mechanism for monitoring and evaluating and verifying organisations’ net zero transition plans, …
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Government Response Summary
The government established the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK’s approach to transition plans and the role of the TPT’s Disclosure Framework, without committing to specific regulatory expectations or an independent monitoring mechanism.
17
Deferred
Para 103
Set out an SDR implementation timetable, commit to mandatory TNFD reporting, and phase in disclosures.
Recommendation
To maintain the UK’s global leadership in green finance reporting, the Government must keep up the momentum. We recommend that Ministers set out an overarching implementation timetable for the SDR, including for TNFD reporting, and commit to making TNFD reporting …
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Government Response Summary
The government reiterates its commitment to Sustainability Disclosure Requirements (SDR) and confirms it will consider how best to incorporate the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations into UK policy, deferring a commitment to a specific timetable or mandatory TNFD reporting.
19
Deferred
Para 111
Introduce UK green taxonomy with spectrum of definitions, monitor progress, and ensure mandatory status.
Recommendation
We recommend that the Government seek to introduce the UK green taxonomy as soon as possible. That taxonomy should include a spectrum of definitions—‘fifty shades of green’, as one of our witnesses put it. During the period of voluntary reporting …
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Government Response Summary
The government commits to publishing a consultation on the UK Green Taxonomy shortly and will implement a voluntary disclosure period for at least two reporting years before considering mandatory obligations. It does not explicitly address the recommendation for a "spectrum of definitions" or quarterly progress reporting, nor does it commit to mandatory status within two years of the voluntary period.
20
Deferred
Heed calls for a long-term institutional home for the UK green taxonomy.
Recommendation
It is unfortunate that, due to the delays to the introduction of the green taxonomy, the remit of the Green Technical Advisory Group expired before the testing period of voluntary disclosures could begin. We urge Ministers to heed the group’s …
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Government Response Summary
The government acknowledges the Green Taxonomy Advisory Group's advice and states it will consider what external advice is required going forward, following a forthcoming consultation. It does not commit to establishing a long-term institutional home for the UK green taxonomy as urged by the committee.
22
Deferred
Para 128
Publish a single document detailing all blended finance models for net zero and nature
Recommendation
The Government must keep to its ambition of setting out its future plans for net zero blended finance solutions by the next spending review, and should include nature recovery projects within this suite of solutions. The Government should set out …
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Government Response Summary
The government announced the Net Zero Blended Finance Project in November 2023, which aims to improve its capacity to explore innovative blended finance approaches and mobilise private investment for net zero technologies. However, the response does not explicitly commit to setting out future plans by the next spending review, including nature recovery projects, or consolidating all models into one document for cross-checking.
25
Deferred
Para 130
Establish formal mechanism by end of Parliament to track net zero and nature financial flows
Recommendation
We recommend that the Government go further and turn this research into a formal tracking mechanism by a date no later than the end of the current Parliament. The Government should task either an existing independent body, or create a …
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Government Response Summary
The government acknowledges the need for tracking investment flows and states that the scoping phase for a UK Landscape of Climate Finance (LCF) model has concluded. It is now considering next steps, including the potential role of an independent body, and will begin gathering data on private finance for nature's recovery this year, but does not commit to a formal tracking mechanism by the end of the current Parliament.