Sunak paints the City of London green as he chases net-zero backing

Joseph B. Hash

“Good morning – and welcome to Cop26 finance day,” said Rishi Sunak as he surveyed an unexpectedly empty Glasgow auditorium.  

The climate summit was supposed to be a watershed moment for the finance industry – earlier this week former Bank of England governor Mark Carney said “this is the beginning of the end for finance”. An apparent lack of interest in the one day dedicated to the sector is likely to have left organisers disheartened. 

Both Carney and Sunak had significant announcements to make. The Canadian unveiled a coalition of more than 450 banks, insurers and asset managers across 45 countries that had committed “up to” $130 trillion (£95 trillion) of private capital to reach net zero emissions targets by 2050.

The Chancellor, on the other hand, kept his focus domestic, announcing that the UK will become the “first-ever net zero aligned global financial centre”.

To achieve this, he said the Government will be legislating to legally force all UK-listed companies and asset managers to publish strategies for how they will reduce their carbon emissions and contribute to reaching net zero by 2050. Fail to do so and risk being fined. 

Details, including how big the financial penalties will be, still need to be ironed out by a taskforce under the control of the City watchdog. This group will be made up of industry and academic leaders, regulators and civil society groups, and will be funded through charitable donations. 

It is understood that the taskforce will be launched before the end of the year, with new rules expected to come into force from 2023. 

City firms have become well versed in preaching their Environmental, Social and Governance (ESG) credentials in recent years.

But campaigners and regulators argue a more formal and transparent system is needed to verify their pledges and avoid “greenwashing” – the misleading of customers and shareholders over a company’s environmentally friendly credentials.

The plan has largely received a warm welcome from the Square Mile. Hendrik du Toit, chief executive of London-listed money manager Ninety One, says shareholders have already been asking companies to prepare transition plans and so having a regulatory imperative in place is a good thing. 

However, du Toit thinks a set of common principles needs to be agreed at an international level. “This is a good initiative but let’s take it to the G20,” he says. 

Huw van Steenis, senior adviser to UBS’s chief executive and Carney’s former senior adviser at Threadneedle Street, says: “Over half of investment firms have now signed up to assess the emissions of their investments – so they are hungry for standardised data to make better decisions.” Bank lobby group UK Finance also welcomed Sunak’s proposal.

Doubts over green goal

Yet the scheme is not as far reaching as they may at first seem. Certain firms, such as mining and oil giants, could be given exemptions from fully reaching net zero, leading campaigners to question the credibility of the plan. 

Next Post

Greta Thunberg Leads Climate Protest, Criticizing COP26 Talks

GLASGOW—Organizers of the COP26 United Nations climate summit welcomed one of their highest-profile critics Friday: Greta Thunberg. Ms. Thunberg headlined an hourslong protest march and rally in Glasgow. Thousands of mostly young protesters, carrying colorful banners and sometimes accompanied by their parents, marched from Glasgow’s Kelvingrove Park to the city […]

Subscribe US Now