Carbon Tracker has responded to the Department for Energy Security and Net Zero’s consultation on the introduction of climate transition plan requirements for UK-regulated financial institutions and large corporates.
In line with our organisation’s mission statement, this submission outlines how the government can set robust requirements for the firms that fall within scope, which both reflect the growing systemic risk we believe climate change poses to the UK financial sector – and to the wider economy – and aligns with the Government’s climate and nature ambitions.
Key points raised within the submission:
- Transition plans should be mandatory.
- The capex costs – debt and equity – of meeting the transition should be included in any plan.
- Financially material physical impacts are on the rise.
- Physical as well as transition impacts are a vital part of any plan.
- Corporate transition plans should provide important, decision-useful information and guidance for investors.
- Distinct guidance should be developed for fossil fuel producers – for reasons we surely don’t have to explain.
- History shows that voluntary market mechanismsare not enough on climate. Governments should not be afraid to regulate in this area.
- We stand by the need to align plans with a 1.5°C temperature pathway, in accordance with the goals of the Paris Agreement.
- We support a national transition plan, which would underpin a whole-of-government strategy.
- Pension funds, as the universal asset owner, are key to addressing systemic climate risks.
