The UK Sustainable Investment and Finance Association (UKSIF) has issued an open letter to UK Economic Secretary to the Treasury John Glen, calling on the government to match EU legislation regarding sustainable finance reforms.
The UKSIF is a coalition of financial services-related companies aiming to promote responsible investment and other forms of finance that support sustainable economic development, enhance quality of life and safeguard the environment. Members represent a broad range of financial sectors including asset managers, banks, service providers, financial advisers and intermediaries, asset owners, and charities.
In the letter, the UKSIF notes that the UK government committed to “match the ambition” of the EU’s sustainable finance reforms regardless of the outcome of the UK’s exit from the EU. The EU reforms aim to reorient capital towards sustainable investment, manage financial risk stemming from climate change, and to increase transparency in financial products to enable citizens to make informed investment decisions. Recently passed EU legislation supporting these goals require sustainability-related disclosures in the financial services sector, and establish a “taxonomy” framework facilitating sustainable investment.
The UKSIF points out, however, that this legislation will come into effect following the UK’s exit, and will thus not apply within the UK, leaving the country with no equivalent legislation to match EU sustainable finance ambitions.
The UKSIF letter calls on the government to bring forward plans to “create a UK version of the EU’s sustainable finance reforms.” The members suggest numerous actions to bring this about:
- Onshore EU sustainable finance policy that supports the delivery of the three objectives of the EU sustainable finance action plan;
- Provide early certainty to UK financial services firms by publishing proposals early and consulting on them;
- Ensure that the UK legal framework is at least as ambitious and does not radically diverge from the EU’s sustainable finance regulatory framework; and
- Correct any deficiencies or shortcomings in EU reforms, learning from mistakes and building on successes.
The letter concludes with a call challenging the UK to maintain its leadership position in financial services and response to climate change:
“The government now faces a decision about how, and whether, it will maximise our expertise in these two areas, and honour its commitment to match the ambition of the EU on the issue of sustainable finance.”