Question to the HM Treasury:

To ask His Majesty's Government what powers they have to require (1) listed and unlisted companies, (2) fund managers, and (3) pension funds to (a) produce and publish net zero transition plans, and (b) meet sustainability disclosure requirements.

The powers to require the production and publication of transitions plans and the meeting of sustainability disclosure requirements for listed and unlisted companies, fund managers, and pension funds sit with the relevant department or regulator with responsibility for the sector. The government’s approach to Sustainability Disclosure Requirements and net zero transition plans was set out in Greening Finance: A Roadmap to Sustainable Investing. His Majesty’s Treasury works closely with the Financial Conduct Authority (FCA), the Department of Work and Pensions (DWP), and the Department for Business, Energy and Industrial Strategy (BEIS) to advance sustainability disclosure requirements.

Powers over listed companies and regulated fund managers in this policy area reside with the FCA, where these policies advance the FCA’s objectives as set out in the Financial Services and Markets Act of: protecting consumers of financial services, ensuring market integrity and promoting effective competition in relation to sustainable finance.

The FCA has extensive powers to require companies within the scope of their authority to prepare and publish net zero transition plans and to impose some of the Sustainability Disclosure Requirements (SDR) that the Treasury has proposed. The FCA’s approach can be seen in the FCA documents including: PS21/23, PS21/24 and CP22/20 and the references therein. However, HM Treasury does not have the power to require the FCA to require specific disclosures, or to direct matters to which the FCA must have regard in developing its approach.

Powers over occupational pension schemes reside with DWP. DWP introduced the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, which came into force on 1 October 2021. The Regulations impose requirements on trustees of larger occupational pension schemes, for the identification, assessment and management of climate-related risks and opportunities.

Powers over UK-registered companies reside with the Secretary of State for BEIS. BEIS have already made regulations requiring disclosure against the standards set out by the Taskforce on Climate-related Financial Disclosures. These regulations came into force on 6 April 2022.