Britain’s finance ministry set out plans on Thursday to meet its target of becoming the world’s first net-zero aligned financial center, proposing measures to stamp out so-called greenwashing in financial markets and channel cash into sustainable projects.
The ministry said in an update to its Green Finance Strategy “we will ensure market participants have the information and tools they need to align to our climate and nature goals.”
In a step the European Union is also due to take, the ministry published a consultation paper on regulating raters of environmental, social and governance (ESG) aspects of companies, used by investors who want to put cash into sustainable assets.
Asset managers oversee assets worth 10 trillion pounds ($12.35 trillion), with nearly half having integrated ESG into the investment process, the paper said.
Regulators want more transparency on ratings to help combat greenwashing, or inflated sustainability credentials. The sector is already developing an ESG Data and Ratings Code of Conduct on best practice.
Later this year, Britain will hold a public consultation on a taxonomy – a guide for investors on what constitutes sustainable investments – after the government paused work earlier this year to learn lessons from the EU’s taxonomy.