Labour calls for mandatory net zero transition plans: Aldersgate Group reactive


In a speech today ahead of COP26 in Glasgow, Shadow Business Secretary Ed Miliband called on the government to make it mandatory for financial institutions and FTSE100 businesses to publish plans for meeting net zero. This follows a letter signed on Monday by the Aldersgate Group and a range of large companies and financial institutions [1], calling for mandatory transition plans to be introduced for large companies from 2025, with the government opening a consultative process in 2022 to develop a roadmap towards the introduction of such a requirement.

Reacting to the announcement, Nick Molho, Executive Director of the Aldersgate Group, said: “We welcome today’s announcement from the Shadow Business Secretary Ed Miliband. Although 60% of the world’s largest companies now support, or report in line with, the recommendations of the Taskforce for Climate-Related Financial Disclosures, less than a third of PRA-regulated banks and building societies surveyed in 2020 had a science based target or net zero strategy in place [2]. The Aldersgate Group sees the introduction of mandatory net zero transition plans as the natural next step to climate-related financial disclosures and one which is essential to drive greater market transparency and good business and investment decisions. At a time where a growing number of companies are taking on net zero targets, the introduction of such a requirement would also promote a level playing field as the economy as a whole moves towards net zero emissions.”

Nick Molho added: “To support the introduction of mandatory net zero transition plans, it will be essential for government policy to encourage businesses and financial institutions in the near term to produce plans on a voluntary basis and for regulators to provide them with supportive guidance. Publishing a comprehensive set of sustainable finance definitions through the upcoming UK green taxonomy will also be essential to support companies in this process and ensure that clear, transparent and comparable disclosures can be produced. It will also be important for businesses and financial institutions to continue mainstreaming sustainable finance knowledge amongst their staff, to ensure they have the expertise and skills required to produce quality plans.”

[1] This week the Aldersgate Group and leading companies, including various FTSE companies and financial institutions, wrote to the Chancellor and Secretary of State for the Department of Business, Energy and Industrial Strategy, calling on the UK Government to make the disclosure of net-zero transition plans mandatory for large companies. Further information can be found here.

[2] Financial Stability Board (October 2020) 2020 Status Report: Taskforce on climate-related financial disclosures; and PWC (October 2020) Rising to the challenge: climate risk in the UK banking sector