Recommendation 3

HM Government Acknowledged

Work on consistent international climate reporting standards is underway. The Government has been proactively working with other countries to drive this forward and will continue to use international fora to progress the uptake of climate- related disclosures such as TCFD. As highlighted in our response to recommendation 2, the Government is strongly supportive of the establishment of the ISSB which aims to introduce global baseline standards for sustainability-related reporting. These reporting standards will build on the TCFD and other leading sustainability reporting initiatives.14 At COP26 the UK Government also secured agreement from 40 countries to support the launch of the ISSB,15 and is the first country to commit to implementing the ISSB standards once finalised.16 This sets an important precedent for the global harmonisation of climate-related reporting standards. As part of the G7, the Government brought climate and environmental issues to the forefront of policy discussions between finance ministries. This was the first time these challenges featured prominently in the Finance Track. The Government worked closely with the Bank of England to secure ambitious commitments from G7 members on sustainability reporting. This included agreement to move towards mandatory climate disclosures, to support the IFRS Foundation’s programme of work to develop a baseline global corporate reporting standard for sustainability, and to promote consistency in 11 Greening Finance: A Roadmap to Sustainable Investing, (publishing.service.gov.uk), p.11. 12 Greening Finance: A Roadmap to Sustainable Investing, (publishing.service.gov.uk), p.14. 13 Greening Finance: A Roadmap to Sustainable Investing, (publishing.service.gov.uk), p.17. 14 IFRS - IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements. 15 UK welcomes work to develop global sustainability reporting standards alongside 40 international partners - GOV.UK (www.gov.uk) 16 Britain to be among first to apply new climate disclosure rules | Reuters 4 Government Response: Pension stewardship and COP26 impact reporting standards.17 Many of these issues were subsequently taken up in the G20, particularly by the Sustainable Finance Working Group (SFWG), of which the UK is an active member. The SFWG has driven progress on sustainability reporting and discussed approaches to align investments with sustainability goals. The UK is also a member of the International Platform on Sustainable Finance, which aims to foster consistency in environmental impact reporting.18 Under the Paris Agreement, Parties committed to making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. To do so, the entire financial system needs to transform, to lock financial flows irreversibly into a pathway to net zero. As set out in the ‘Greening Finance: A Roadmap to Sustainable Investing’, ahead of COP26 the UK Government was working closely with international partners to galvanise global action.19 The Government wants its domestic regulation to represent international best practice. This strong domestic action, coupled with international influencing, will ensure that the UK remains a global leader in green finance after COP26 and help to move the world towards delivering the global commitments in the Paris Agreement.