Select committee: Treasury Committee
Recommendation 13
Thirteenth Report - Net zero and the Future of Green Finance
Published 22 Apr 2021
Paragraph 108
Addressed to HM Treasury
Treasury Committee Decarbonisation and Green Finance All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
There is a high level of inertia amongst consumers around defined contribution pension fund choice, with most remaining in the ‘default’ fund. The Treasury has been robust in its view that default funds should not be required to move to more green alternatives, but at the same time maintains that consumers should not have to switch out of the default fund to invest sustainably. The Government should resolve this apparent contradiction. At present the Treasury is relying on a blend of disclosure, regulation and public investment to foster a transition towards more sustainable investment. For now, we support that approach, but the Treasury should report regularly on the proportion of pension holders in defined contribution pension schemes who remain in the default fund, and the extent to which those default funds are aligned with a path to Net Zero.
From: Treasury Committee, Thirteenth Report - Net zero and the Future of Green Finance (HC 147), paragraph 108, 22 April 2021
Government response
The government responded to the whole report on 16 July 2021 (deadline 22 June 2021).
Summary written by Accountability Index from the government's response. It is not the government's own words.HM Treasury thanks the Committee and says it "will reflect on" the issues raised while it works through "the next stages of the transition to net zero", responding recommendation by recommendation with some points addressed and others referred to the FCA and the Bank of England.
- On Solvency II, the Government "agrees with this recommendation" that its review should consider reforms to improve the funding of sustainable green infrastructure while maintaining insurers' financial stability.
- On cost estimates and the Net Zero Review, the Treasury says the final report "will not be making policy recommendations", including on individual departmental spending and net zero commitments, though it will update on how climate considerations are embedded in Treasury governance.
- On the Long Term Asset Fund, the Government "cannot commit to a timeframe for the launch" because it is for industry to establish and invest in the funds. The FCA is "expected to finalise rules in the Autumn".
- On disclosure and the taxonomy, the Government says it "intends to legislate" for economy-wide sustainability disclosure requirements and will publish a Roadmap on green finance regulation "ahead of COP26".