Newly reappointed pensions minister Guy Opperman said today that new climate reporting measures for pension funds were a “challenge” and “burden” for fund managers but it was clear it was now the only way to clean up investment.
Opperman, who resigned and was reappointed to his role last week, said that becoming the first country to mandate Climate-related Financial Disclosures (TCFD) had presented challenges to investors but offered the UK an opportunity to “lead the world”.
“Any new regulatory change is a challenge, we all get that. And I accept that I am placing a significant number of burdens on trustees and their investment managers as we go forward,” he told the Sustainable Investment Festival this morning.
“But I think they are embracing it. And the idea that there is anything other than this way forward has been completely debunked.”
Opperman added that becoming the first country to put TCFD disclosures on the statute book and then to do the regulations “prior to the COP summit last year was a massive thing.”
The TCFD first recommended a series of guidelines to firms in 2017 to help firms provide better informations to support investment strategy, with the UK government then confirming ahead of the COP26 summit last year that it would introduce mandatory TCFD-aligned reporting requirements for the private sector from 6 April 2022.
The requirements currently apply to schemes with assets of more than £5bn and will be introduce to mid-sized scheme later this year, as well as to around 1,300 companies who are either listed or have over 500 employees and turnover more than £500m.
Opperman additionally called for greater standardisation in the metrics used for climate reporting to stamp out greenwashing.
“We made the argument and we have won the battle. Now we have to win the peace and that peace will have metrics that avoid greenwashing and genuinely allow you to start showing and understanding how the companies you are investing in really are,” he said.
The comments come as regulators in the UK prepare to ramp up scrutiny of supposedly green investments and bring environmental, social and governance (ESG) data and ratings within their regulatory perimeter.
The FCA said last week that it backed government proposals to bring them within its remit in a bid to drive greater standardisation in the way that ESG products and investments are labelled.