Climate Finance Policy Engagement Analysis
Climate Lobbying Overview: UK Finance appears to have mixed engagement on climate-related finance, taking largely positive positions on climate disclosure regulation, and more negative positions on climate standards and labels, taxonomies, and integrating climate factors into risk management.
Top-Line Messaging on Climate-Related Finance Policy: In a 2022 consultation response to the updated UK Green Finance Strategy, UK Finance supported zthe UK’s net zero by 2050 target and a role for the financial sector in meeting decarbonization targets. In a 2022 consultation response on the updated UK Green Finance Strategy, UK Finance supported government regulation on sustainable finance. Further, in 2023 article, UK Finance urged the UK Government to make progress on climate commitments in the 2023 Green Finance Strategy.
Position on Regulated Corporate Climate Disclosure In May 2024, UK Finance signed onto a joint response by PRI advocating for the adoption of the International Sustainability Standards Board (ISSB) disclosure standards, including climate transition plan disclosure, by national jurisdictions. This position was reiterated in comments to the ISSB in August 2023. In a 2022 consultation response, UK Finance supported the establishment by Her Majesty’s Treasury (HMT) of the UK Transition Plan Taskforce (TPT), the mandating of science-based transition plans, and the application of rules to both private and listed companies, a position supported in 2022 comments to the TPT.
Position on Taxonomies: In a 2024 position paper, UK Finance did not clearly support the UK Green Taxonomy, pressing for an open consultation before its implementation and suggesting that there may not be sufficient evidence to demonstrate that taxonomies mobilize low-carbon capital. This is in contrast to 2021, when it stated general support for the development of a science-based UK Green Taxonomy in a consultation response to the Treasury’s Net Zero Cost Review in 2021. In addition, in 2022 comments to the Department for Business, Energy and Industrial Strategy, UK Finance supported the broad aims of the Green Taxonomy, however ambition on what would be considered ‘green’ was unclear.
Position on Incorporating Climate Factors Into Risk Management/Prudential Regulation: iUK Finance has also commented on the Basel Committee’s (BCBS) efforts to develop climate risk management principles which are likely to inform government policy. In 2022 comments, UK Finance strongly supported incorporating climate into banks’ internal risk management and regulatory supervision. However, in a 2024 consultation, UK Finance outlined significant objections to the BCBS proposed integration of climate factors into Pillar 3 disclosures, and questioned the relevance of banks' climate strategy, emissions, and physical risk exposure to capital adequacy and physical risk.