Updated Green Finance Strategy – Climate Change

In a big week for environmental news, the UK government last week published its Green Finance Strategy 2023 (GFS), which sets out its plan to mobilize the investment needed to meet climate and nature targets and turn UK in ‘world’s first net zero financial centre’. The UK Government has also published a range of new policy papers relating to energy security and net zero investment and innovation – through this postwe cover the ‘Strengthening Britain’ report.

The GFS, developed by HM Treasury, the new Department of Energy Security and Net Zero and the Department for Environment, Food and Rural Affairs, provides more detail on the policy initiatives previously set out in two important green finance publications: The Green Strategy 2019 funding and the 2021 funding greening roadmap.

The highlights are:

• The proposed Sustainability Disclosure Requirements (SDR) regime is being implemented, but the Financial Conduct Authority’s new rules on sustainable investment disclosures and labels have been delayed until the third quarter of 2023 (due to the volume of consultation feedback received).




• The UK Transition Plan Working Group will consult on introducing requirements for the UK’s largest (not just listed) companies to disclose their net-zero transition plans.




• The International Sustainability Standards Board’s sustainability disclosure standards will be assessed through a formal mechanism for incorporation into UK company law alongside a wider review of the UK’s non-financial reporting framework.




• Steps to standardize reporting on Scope 3 greenhouse gas emissions will be taken, starting with a call for evidence later this year to better understand the costs and benefits of producing and using this information.




• The UK’s Green Taxonomy (to provide investors with “definitions of which economic activities should be labeled as green”) will continue and will included nuclear power as a “crucial source of reliable low-carbon energy” (subject to consultation in autumn).




• The risk management and disclosure framework developed by the nature-related financial disclosure task force (expected in September 2023) will be incorporated into the UK’s policy and legislative architecture.

The GFS makes clear that the UK Government intends to position the UK as a global hub for trading voluntary carbon markets and will hold a consultation later this year that will address the key recommendations of the independent Net Zero Review and the Committee on Climate Change report on voluntary carbon markets and offsetting.

Further information and clarity for trustees regarding their fiduciary duties in the context of the transition to zero net worth will be provided through a review of the Governance Guidelines in late 2023.

The GFS highlights the critical role of private investment and capital in achieving net zero, building climate resilience and helping nature recover. There is planned work with the Green Finance Institute to explore how ‘blended finance’ models can be used to activate private finance to support green goals.

Corporations and investors need to keep a close watch to keep up with the new accountability requirements and new opportunities arising from the transition to a decarbonized economy.

The GFS was released alongside a wider set of policy papers unveiled on 30 March – dubbed the UK government’s Green Day. Read here for our breakdown of the day and what was (or wasn’t) announced.

Originally published on April 5, 2023

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