UKSIF Policy Briefing: Defining a net-zero financial centre in the UK

Oscar Warwick Thompson
Oscar Warwick Thompson16th December 2021

UKSIF’s policy briefing sets out the sustainable finance sector’s initial response to the Chancellor’s pledge at ‘Finance Day’ at COP committing the UK to be the ‘world’s first net-zero aligned financial services centre.’ Drafted in very close consultation with our Policy Committee, our briefing highlights some of the areas that government should consider further for the UK to achieve the Chancellor’s world-leading ambition and move finance towards net-zero.

The areas we recommend for further action from the UK include:

  • Promoting net-zero aligned private investment through clarity on the UK’s future tax and spending plans: Far greater clarity over future public investment plans is vital to drive investments towards net-zero, particularly with the UK economy not yet aligned on a 5°C trajectory. We would like to see government introduce carbon pricing and other fiscal measures as well to transform the real economy.
  • ‘Net-zero aligned’ investor stewardship and climate transition plans: Government should continue to recognise stewardship’s positive role over an exclusive focus by investors on divestment. We support proposals to introduce mandatory climate transition plans once a shared definition of a ‘good-quality’ transition plan has emerged, and these should be extended to large private companies.
  • Measuring and addressing sustainability risks through a world-leading regulatory framework: The UK’s Sustainability Disclosure Requirements regime and Green Taxonomy should set a high standard for the rest of the world to follow. Government should commit to consulting on a ‘transitional taxonomy’ to help shift the whole economy to net zero, and a ‘social taxonomy.’
  • Net-zero targets and commitments for financial services: Policymakers should not adopt a mandatory approach to net-zero targets, but seek to encourage a broader group of firms to participate in voluntary initiatives and look to build on their success.
  • Ensuring clients are brought along on the ‘journey to net-zero’: Clients’ mandates should be respected as we shift to net-zero, and there should be more meaningful engagement opportunities for clients and savers with their asset managers. Asset owners should now have the opportunity to set an “expression of wish” as to how votes are exercised on their behalf in pooled funds, which an independent taskforce to DWP has recommended.
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