With London Climate Action Week underway, attention is understandably focused not just on what London (and the UK) is doing but also what is happening on the wider global arena.
Last year, the Prime Minister launched his Ten Point Plan for a "green industrial revolution", with emphasis on low-carbon energy solutions including offshore wind, CCS and hydrogen. Since then, however, the government's own climate advisers (the Committee on Climate Change) have warned that the UK is not in line to meet its climate targets and that the Ten Point Plan needs to be backed with firm policies. The CCC is therefore urging the government to publish the (long-awaited) comprehensive Net Zero Strategy, as well as decarbonisation roadmaps for transport and buildings, as a matter of urgency and certainly before the COP26 climate summit in November. “With every month of inaction, it is harder for the UK to get on track.” The CBI and other business leaders in the UK have echoed that call (see here).
Climate is also very much on UK banks' and insurers' minds with the Bank of England's climate stress test currently under way (see here).
Companies in the UK will also have seen the recent FCA consultation on extension of TCFD reporting to standard listed companies, with similar rules also envisaged for UK asset managers and owners (see here and here). The UK government is on a mission to roll out mandatory TCFD reporting across the economy by 2025, with most of the measures expected to be introduced by 2023. This is not reporting for the sake of more reporting. The end game is to improve transparency of what companies, banks, insurers, asset managers and pension providers are doing about climate risks (and opportunities) so that vast amounts of money can be reallocated towards greener, more sustainable solutions. And the London Stock Exchange has not been snoozing on the job either - with the FTSE Russell threatening to remove over 200 companies from FTSE4Good indices for climate reasons (see here).
On the wider global arena, investor engagement on climate issues has been ramping up this year with a number of climate-related shareholder resolutions at AGMs and a widespread call for shareholders to be given a "say on climate" vote (akin to the say-on-pay votes) on companies' climate plans (see here).
As for the EU, well...no one can accuse them of inaction on climate - with EU officials on the verge of burn out to get the Commission's "Fit for 55" package of proposals off the ground by 14 July, and the Renewed Sustainable Finance Strategy and EU Green Bond Standard expected next week on 6 July. Not to mention the dreaded (yes, dreaded) EU Taxonomy Regulation and SFDR. In fact, the whole thing is getting so complicated that we came up with a Sustainable Finance Survival Guide for our clients, so they can keep track of what's what.
And let's not forget that the US is also playing catch-up on climate with President Biden's recent missive to federal regulators requiring them to assess the impact of climate-related financial risk and report on their plans to improve climate-related disclosures, among other things. The Chair of the SEC, Gary Gensler, has said he expects to propose new rules on corporate climate risk disclosures in the second half of 2021. Wondering how the US' climate regulatory and policy landscape is developing in comparison to what's happening in the EU and UK? Well, we've got that covered too in our handy comparison of what's happening on either side of the pond.
Dare we even mention the recent Shell climate case which set off a global shock wave... Wondering if that court decision might result in copy-cat litigation either in the Dutch courts or further afield? And whether other companies with carbon-intensive footprints (not just the oil & gas sector) might also be in the firing line? See here and here.
So what can our clients be doing to make sure their climate transition plans are as robust and (hopefully) as litigation-proof as possible? See our practical tips here and here.