Legal & Regulatory News

Treasury Committee publishes report of regulatory responses to recommendations on net zero and green finance

On 15 July 2021, the House of Commons Treasury Committee (the Committee) released the, 'First Special Report of Session 2021-22: Net Zero and the Future of Green Finance: Responses to the Committee’s Thirteenth Report of Session 2019-21 (HC 576)' (the Special Report). The Special Report includes responses from the UK Financial Conduct Authority (FCA), the Bank of England (BoE) and HM Treasury (the Treasury) to the Committee’s 'Thirteenth Report of Session 2019-21: Net Zero and the Future of Green Finance (HC 147)'.

The Special Report includes a number of recommendations from the Committee, including the following:

• The Treasury must work with the FCA to ensure that the regulator has the appropriate remit, powers and priorities, and uses its powers, to prevent ‘greenwashing’ of financial products available to consumers.
• The Treasury and the FCA should consult on the merits of making climate or carbon labels for consumer financial products mandatory, as a means to encourage innovation.
• The Treasury and regulators should ensure that all indices (whether conventional or climate friendly) clearly set out the overall carbon footprint of the assets included within indices.
• The FCA should consider undertaking further ‘green fintech challenges’ to encourage innovation.
• The Treasury and regulators should work at speed to ensure that there is a clear timetable and legislative pathway to deliver a UK taxonomy ahead of COP26 in November 2021.
• BoE should explain its thinking as to what measures it might consider appropriate for the capital regime to better accommodate the climate risk associated with different investments.
• The Chancellor should publish the Government's Net Zero Strategy as soon as possible and should set out, in conjunction with the Net Zero Review final report, the principles upon which the UK will fund its transition to net zero carbon emissions by 2050.

Click here to access the Special Report.