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The ESG Review: A muted response for UK’s green finance strategy

Do you know that feeling of being about to go on holiday and rushing to push a multitude of things out of the door before you head off?

That’s how the Government’s cascade of announcements in late March seemed, with document after document being shared publicly and brought before the House before the Easter recess.

Amongst them was the new Green Finance Strategy – the Government’s first comprehensive update in that area since 2019, which given events in the meantime feels like a lifetime ago. The series of announcements emphasised the need to safeguard the environment and cut carbon emissions to reach net-zero, and in the finance strategy outlined new measures for unlocking ‘finance for nature’.

As with the other proclamations, there was criticism over how much of the content was new rather than rehashed or (PR word coming, brace..) repurposed. This Reuters piece best sums up the response - a muted one, to a mixed bag.

What was new was the UK’s equivalent response to the European Union’s green finance taxonomy, promised in 2021 but two years later seeing Britain playing catch-up with its neighbours, who’ve already published theirs. We already knew that the UK would classify nuclear power as ‘green’ as it had been previewed. Yet there were a number of holes in what remains an incomplete taxonomy, with much still to be made clear.

The strategy also underlined the importance of “innovative financial products and services” to support high-emitting sectors that are tough to decarbonise, which will be described as transition finance products and will be subject to a forthcoming Government review. The UK has already come under fire for risking falling behind the US and EU over this.

Importantly for large corporates and what they communicate, the strategy also included a new Transition Plan Task Force that will nail down - in time - clear plans for how big businesses that create the most emissions should share detail of what they’re doing to reach net-zero. With final guidance on this due at some point this summer, this will be the UK’s counter to the reporting regulations and timetable that the EU has already introduced.

The current Government guidance is that companies should publish a plan for their net-zero transition this year, then annual progress reports and an update report in 2026. Detail of what is required remains foggy though.

There was also an update, of sorts, on Scope 3 emissions reporting, in that the Government will update its Environmental Reporting Guidelines by first trialling a new approach to them later this year. This is currently a voluntary framework, and again detail is pending.

What does this all mean for corporate communications? On the face of it, not much. Being optimistic though, little has gone forwards but nothing has particularly changed course, and in the run-up to party conference season and beyond we should see much of this becoming clearer or falling into place.

In principle, the measures may not end up varying wildly from what the EU has already introduced, though potentially softer in some areas and more assertive than others. For now, it’s a case of as-you-were, but expect movement on this in the second half of this year as the General Election begins to loom on the distant horizon.

The ESG News Review is written by Steve Earl, a Partner at BOLDT.

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