Purpose on Payday

By Sophie Morello

This week the Government announced the formation of the UK Transition Plan Taskforce (UKTPT) to deliver the Government’s ambition to make the UK the “world’s first net zero-aligned financial centre.” 

The Taskforce will “develop the gold standard” for climate transition plans aligned to the net zero by 2050 targets, mapping out what financial institutions and listed companies should be including and aiming for. 

A key part of this will be ensuring thorough and reliable disclosure to tackle any hint of greenwashing.

We knew reporting requirements were coming, with the Chancellor previously saying large companies will be expected have transition plans in place by 2023. But rather than waiting for guidance from the UKTPT, businesses large and small need to start assessing their environmental impact now to ease the burden of the reporting task later on, and get a grasp of any potential reputational risks that go hand in hand with not making and adhering to meaningful, science-based targets.

From 6 April 2022, over 1,300 of the UK’s largest companies and financial institutions will be required to disclose climate-related financial information on a mandatory basis – in line with recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD). This will include many of the UK’s largest traded companies, banks and insurers, as well as private companies with over 500 employees and £500 million in turnover.

This month, the Financial Conduct Authority (FCA) announced that it has finalised rules for listed companies to disclose on diversity and inclusion at the board and executive committee level, beginning from financial periods starting from 1 April 2022.

Under the new listing rules, companies will have to include a statement in their annual financial report setting out if they have met specific diversity targets set by the regulator.  

Also this month, The Better Business Act campaign, co-chaired by Mary Portas, the retail guru, called on the Government to amend Section 172 of the Companies Act to ensure businesses are legally responsible for benefiting workers, customers, communities and the environment while delivering profit. Their hope is that The Better Business Act is included in the upcoming Queen’s Speech and if it succeeds, it will mark a fundamental shift towards stakeholder capitalism. With support of over 1,000 companies, the campaign says that 76% of people in the UK want businesses to be legally responsible for their impact.

And research published this week from think tank Onward shows that despite the unprecedented cost of living crisis and criticism of the net zero strategy from places such as the Net Zero Scrutiny Group and Nigel Farage, the UK public remain strongly supportive of the net zero mission. The findings showed that the Conservative party could lose two in five (39%) of 2019 Conservative voters if it scrapped its climate commitments. This is significant because we are only seven months away from COP27 when the world will be expected to pledge far more stringent carbon reduction targets and plans to safeguard biodiversity and the natural world, so it’s vital that politicians understand that public support continues to be strong despite other societal pressures.