Source · Select Committees · Treasury Committee
Recommendation 17
17
Paragraph: 137
We note the concerns expressed about indices, in that the most popular may be carbon-intensive,...
Conclusion
We note the concerns expressed about indices, in that the most popular may be carbon-intensive, and those that purport to be green may have carbon-intensive constituents. The risk remains that many consumers are unaware of the carbon- intensity of the indices that their passive investments are tracking. The Treasury and regulators should therefore ensure that all indices (whether conventional or climate- friendly) clearly set out the overall carbon footprint of the assets included within indices.
Paragraph Reference:
137
Government Response
Acknowledged
HM Government
Acknowledged
The Benchmarks Regulation places regulatory requirements on the provision and use of financial indices that are used as benchmarks. In 2019, the Benchmarks Regulation was amended to enhance the transparency and comparability of low-carbon benchmarks. The Regulation creates specific disclosure requirements and minimum standards to be used within the calculation methodology of benchmarks, and introduces two new categories of climate-related benchmark to support investors who wish to pursue climate-conscious investment strategies. This will help ensure that consumers can make informed decisions about their investments. Funds will also be in scope of the UK green finance taxonomy’s disclosure obligations. Please refer to the FCA’s response for further information.