UK government announces package of reforms for sustainable finance in Mansion House speech

The UK Chancellor, Rachel Reeves, has used her first Mansion House speech (see here and here) on 14 November 2024 to announce a package of reforms designed to make the UK a global leader in sustainable finance.

The package includes:

A consultation on the value case for a UK Green Taxonomy

The government has launched a consultation to explore whether the UK Green Taxonomy can be a useful classification tool to facilitate an increase in sustainable investment and/or reduce greenwashing. Other jurisdictions have introduced a taxonomy but after several delays the UK has not yet put forward its own taxonomy. Now the government says that it wants to “learn the lessons” of taxonomy implementation elsewhere. The consultation asks, among other things, whether interoperability with existing taxonomies would be helpful. 

The consultation closes on 6 February 2025.

Regulating ESG ratings providers

The government has responded to its 2023 consultation on regulating ESG ratings providers, noting that there is strong support for the policy. It has also released draft legislation which applies to both UK and overseas based ESG ratings providers. The draft legislation is open for technical feedback until 14 January 2025. The overall process of designing, developing and commencing the ESG ratings regulatory regime is expected to take approximately four years, with the government aiming to lay the legislation before Parliament in early 2025.

Following its introduction to Parliament, the FCA will consult on the specific rules that will need to be met by ESG ratings providers. These are expected to be informed by IOSCO’s 2021 recommendations. This consultation will include exploring whether an overseas ESG ratings provider would be expected to set up a subsidiary in the UK.  Find our detailed client note here

Co-launching a Transition Finance Council with the City of London Corporation

The establishment of the Transition Finance Council was a key recommendation of the Transition Finance Market Review (TFMR) which was published last month (see our earlier blog post). The aim is to support higher emitters to transition towards net zero.

Other upcoming publications include:

• A consultation in the first half of 2025 on transition plans.
   
• A commitment to consult on sustainability disclosures for economically significant companies using the UK Sustainability Reporting Standards.
   
• Launching a set of integrity principles for voluntary carbon and nature markets at COP29 ahead of a consultation in early 2025. 

Financial Services Growth and Competitiveness Strategy

The Chancellor's Mansion House speech included a raft of other reforms aimed at making the UK financial services sector more competitive.

In a wider call for evidence, the government is inviting feedback on its plans for the financial services sector. 

Responses will inform the UK’s first Financial Services Growth and Competitiveness Strategy, which the government will launch in spring 2025. 

The consultation paper suggests strategy objectives and key policy pillars to support the five priority growth opportunities that the government has identified: 

• fintech; 
• sustainable finance; 
• asset management; and 
• wholesale services, insurance and reinsurance, and capital markets. 

The call for evidence closes on 12 December 2024.

For more information on that wider call for evidence, see our client briefing: Growth mindset: Mansion House package backs regulatory reform for economic growth.