Financial Services and Markets Bill adds nature into net-zero reg
June 14th, 2023
The UK’s House of Lords has added an amendment to the Financial Services and Markets Bill that adds nature to the upcoming regulatory principle on net-zero emissions.
The amendment means the bill would now require both the Prudential Regulation Authority and the FCA – the two most powerful financial regulators in the UK – to consider both reaching net-zero emissions and protecting nature in decision-making.
Baroness Hayman, who introduced the amendment, said: “I recognise that various initiatives are under way, such as the work of the Taskforce on Nature-related Financial Disclosures, which will undoubtedly make a contribution over time, but relying on voluntary action and market forces will not produce a transformation at the pace and scale required.”
The bill is currently at the report stage in the UK House of Lords.
Karen Ellis, WWF’s chief economist, said she was “delighted” protecting nature would be recognised as a regulatory principle alongside net zero and urged the government to accept the amendment.
She added: “Financial regulators must embed climate and nature at the heart of their decision making so the UK finance sector can become the world’s first net-zero aligned finance centre – a promise that Rishi Sunak made at the Glasgow climate talks in 2021.”
Baroness Hayman also tabled a proposal which would allow the FCA to give guidance to fund managers and pension schemes on considering ESG factors when making an investment.
In March, the Lords voted in favour of an amendment to the bill that would make sure financial institutions carry out due diligence when investing in, or lending to, businesses producing “forest risk” commodities such as beef, palm oil and soy.
Baroness Boycott, who introduced the amendment, said it was a necessary addition because the Taskforce on Nature-related Financial Disclosures only required investors to report if they were making those investments, it didn’t enforce any change.
The amendment follows earlier additions to the bill proposed in the House of Lords in January, including changes to improve voting transparency and adding measures to take into consideration the UK’s net-zero objectives.
Last Updated: 14 June 2023