UK firms will have to start disclosing climate impact with annual fillings

Environmental reporting

Some large UK businesses will have to start disclosing their environmental impact, under new rules set to be brought in by the Treasury.

The requirements will also apply to investment products and pension schemes.

It comes ahead of November’s COP26 meeting in Glasgow, where world leaders will discuss their climate commitments.

Experts say the UK, which is hosting the event, is not currently on track to meet its own emissions targets.

Boris Johnson has pledged to cut emissions by 78% by 2035, compared with 1990 levels.

The Treasury said the new sustainability disclosure requirements (SDR) mean an investment product will now have to set out the environmental impact of the activities it finances.

In addition, a company’s sustainability claims will have to be justified “clearly”, and their net zero transition plans properly set out.

The aim is to combat “greenwashing”, where firms make misleading claims about their environmental commitments.

But the government said the information will “only be impactful” if customers and investors actually use it.

Chancellor Rishi Sunak said: “We want sustainability to be a key component of investment decisions, and our plans will arm investors with the right information to make more environmentally-led decisions.”

He said the rules will “set new global standards for sustainability that will boost the economy, protect the planet and support our net zero goals”.

It is unclear when the rules will come in, or what will happen to firms that do not comply. Details of the specific reporting requirements will only be developed after a public consultation.

‘Positive step’

Mr Sunak first mentioned SDRs in July and has announced these next stages for the requirements in the report: “Greening Finance: A Roadmap to Sustainable Investing”.

Boris Johnson’s government is currently on track to cut only about a fifth of UK emissions by 2035, compared with 1990s levels, according to a group of experts that advises the government.