UK to force large firms to disclose climate-related risks

Government vows to make British economy ‘the greenest in the world’

Many of the UK’s largest firms are based in the City of London (PA Archive)

The government has announced that large companies will be obliged by law to share climate-related financial information from next year.

Ministers said the UK is the first country in the G20 to make such disclosures mandatory.

The rule, which comes into effect on 6 April, will only apply to around 1,300 UK-registered firms, including banks and insurers, as well as private businesses with more than 500 staff and annual turnovers of £500m.

Some companies, including Aviva, Tesco and Unilever, already voluntarily provide the information required by the new law.

The decision to force others to do the same comes on the recommendation of the Task Force on Climate-Related Financial Disclosures, a group established at the Paris climate summit in 2015.

It is hoped that the policy will give investors greater awareness and will encourage businesses to become more green.

The announcement comes two days before the start of the Cop26 climate conference in Glasgow and follows the UK’s publication of its Net Zero Strategy.

Announcing the law, climate change minister Greg Hands said the UK needed the financial sector to “put climate change at the heart of their activities and decision making”.

He added that the government was committed to making the UK’s financial system “the greenest in the world”.

Flora Hamilton, head of financial services at the Confederation of British Industry (CBI), welcomed the new framework.

“Increased transparency and more comparability on corporate sustainability performance will be key for directing more money to sustainable projects across the whole economy,” she said.

Despite its green pledges, climate activists think that Boris Johnson’s government is not doing enough to fight climate change. Earlier this week, chancellor Rishi Sunak reduced the duties paid by passengers on domestic flights, a move which was strongly condemned by environmental groups.

Rebecca Newsom, head of politics at Greenpeace UK, said: “The climate emergency should have been the centrepiece of this spending review ahead of the most critical UK-hosted climate talks in years, but Sunak spent more time discussing duty on domestic cider.”