Day 3 of COP-26, a day dedicated to financing of the new net-zero economy, has been an extremely important one for publicly-listed companies in the UK and around the world. On Wednesday morning, UK Chancellor Rishi Sunak took to the stage, addressing an audience of finance ministers, central bank governors, heads of multilateral financial institutions and senior leaders as he outlined his government’s plan to make the UK the first net-zero financial centre.
But what does this mean for companies? Here are 3 key takeaways:
- Financial institutions and companies with shares listed on the London Stock Exchange must now come up with net-zero plans.
- Plans must include targets to reduce gross greenhouse gas emissions.
- In addition, companies must publish a roadmap which lays out how they intend to reach Net-Zero.
Unfortunately, Mr Sunak’s speech was sparse on specific detail regarding what would be required in these strategies, however the UK Government has promised a taskforce of industry leaders, academics, regulators and civil society groups, charged with setting a science-based “gold standard” to ensure that net-zero strategies have substance and are immune to accusations of “greenwashing”.
This Green Finance plan is hoped to bring new pressure on financial institutions to make more eco-friendly investments, encouraging investment away from “brown” coal and oil-based infrastructure and into new low-carbon technologies. It also means that companies involved in mining, drilling for oil, burning fossil fuels for energy and other carbon intensive activities will have to prove that they are planning on going green.
This news comes hot on the heels of another recent announcement by the Science-Based Target Initiative (SBTi), who recently released a new standard for net-zero targets. With the UK government requiring comprehensive targets and SBTi now allowing companies to certify science-based net-zero targets from the beginning of 2022, it is expected that the exponential growth in the number of science-based targets registered over the past 24 months is set to continue well into next year.