Government ministers have refused to make climate-related financial disclosures mandatory, as advised by the Environmental Audit Committee (EAC).
The Committee has published the government response to its recent report calling for more sustainability to be embedded in financial decision making – the original document found investment incentives in the UK market often focus on short-term returns and frequently neglect longer-term considerations such as climate change.
However, government and regulators have taken action on a number of the Committee’s other recommendations, such as to improve pension fund governance and require trustees to set out how they will listen to members’ views in developing investment policies.
The government has also agreed to clarify that trustees have a fiduciary duty to consider long term risk and opportunities, including environmental risks and is now consulting on amendments to pension scheme regulations that would require trustees to set out how they take account of potential dangers and opportunities.
Mary Creagh MP, Chair of the EAC, said: “We are pleased that the government and regulators are acting on our recommendations to improve how pension schemes factor climate change risks and opportunities into their decision making.
“It is disappointing that the government has not used this opportunity to follow France in making it mandatory for large companies and asset owners to report their exposure to climate change risks and opportunities.”