Headlines from COP26

Following ‘Finance Day’ at COP26 yesterday, here are the main headlines:

UK Pledges to Become World’s First Net-Zero Aligned Financial Center

Rishi Sunak announced proposals requiring financial institutions and listed companies to publish net-zero transition plans, by 2023 that specify how they will adapt and decarbonize as the UK moves towards a net-zero economy by 2050. The plans must include targets to mitigate climate risk and the measures necessary to meet them.

Formation of the International Sustainability Standards Board (ISSB) 

THE ISSB is being launched by the IFRS Foundation, the body responsible for international accounting standards.  THE ISSB plans to replace voluntary guidelines with a single set of standards for firms reporting the impact of climate change on their business. Additionally, the ISSB will aim to help investors and regulators by creating baseline sustainability disclosure standards, so information is equivalent across industries and financial markets.

Glasgow Financial Alliance for Net Zero (GFANZ) Pledges $130tn Towards Global Net-Zero Economy

GFANZ consists of more than 450 firms based in 45 countries and manages around 40% of global assets. Members of the alliance have agreed to meet the goals set in the Paris climate agreement and are expected to develop science-based green financing plans and set interim targets for 2030. Mark Carney, chair of GFANZ revealed the group could provide up to $100 tn in funding to help economies go to net zero in the next three decades.

FCA Publishes New ESG Strategy

The FCA published a new ESG Strategy, which was scheduled to coincide with COP26 Finance Day. The Strategy builds on the commitments in the most recent FCA Business Plan and comes after the recent publication of the FCA and PRA Climate Adaptation reports.  Key announcements include:

• Enhance climate-related financial disclosures.
• Promote global consistency and comparability in corporate reporting on sustainability matters.
• Developing a policy approach on competency greenwashing and enhancing governance and alignment of incentives – including remuneration – in regulated firms.
• Enhance transparency of listed companies and regulated firms’ diversity and inclusion performance.