Regulators have been urged by the IMF to do more to prevent financial companies from making misleading claims concerning their environmental credentials – ‘Proper regulatory oversight and verification mechanisms are essential to avoid greenwashing.’ To achieve the expansion needed to reach the target of reducing worldwide carbon emissions to net zero by mid-century, will require a proper understanding by investors how their money is used.
From April the UK’s biggest companies will be required to make climate-related financial disclosures. Firms with a turnover in excess of £500m and at least 500 employees are expected to publish the climate-related risks they face. With the UK the first G20 country to make this compulsory, John Glen, Economic Secretary to the Treasury commented, “These requirements will not only help tackle greenwashing but also enable investors and businesses to align their long-term strategies with the UK’s net-zero commitments.”
The requirements for disclosure will be aligned to the Task Force on Climate-Related Financial Disclosures, backed by over 1,000 global financial institutions, and responsible for over $190trn of assets. Companies will need to “focus on the effects of climate change on their business” and communicate to investors how these are being managed, according to Chris Cummings, Chief Executive of the Investment Association.
The value of investments and income from them may go down. You may not get back the original amount invested.