Major UK FS bill lacks net-zero provisions
January 19, 2023
The UK’s House of Lords has urged the Financial Services and Markets Bill must be amended to facilitate the transition to a net-zero economy.
During the bill’s second reading at the House of Lords on 10 January, Lords argued the bill is failing to take into consideration the UK’s net-zero objectives.
In 2019, a net-zero target of 2050 was set for the UK economy.
The bill aims to provide the UK with an opportunity to fulfil its potential to lead the global transition to green finance and promote a thriving net zero financial sector.
However, the bill does not currently contain an amendment which requires financial services regulators to follow regulatory principles.
Instead, regulators must “have regard” for the UK’s statutory net-zero emission targets and “take them into account when pursuing their statutory objectives.”
As a result, the House of Lords has criticised the bill for missing an opportunity to establish mandatory net-zero transition plans.
Lord Vaux of Harrowden said: “It is welcome that the regulators should “have regard” to net zero, but I would be keen to hear from the Minister what the practical difference is between a secondary objective and a “have regard” requirement.”
Lord Bishop of St Albans added: “It is more urgent than ever that we introduce mandatory net-zero transition plans so that large companies report on how they will manage the transition to net zero.”
The Lords also recommended amendments must be made urgently to prevent the UK from falling behind in the transition to net zero while other countries advance.
Lords are concerned the bill may fail to establish the UK as the world’s first net-zero financial centre unless amendments are made quickly.
Baroness Hayman said: “While we delay, other countries are making leaps ahead in green finance. Both France and Germany have given their regulators statutory objectives linked to climate change and sustainability.”
Last Updated: 19 January 2023