Companies and banks should face censure if they exaggerate the environmental sustainability of their lending and operations, an influential Parliamentary committee urges today (Thursday 22nd).
The backbench Treasury select committee recommends in its report out today that consumer loans and other financial products boasting of green credentials must have those claims independently verified. The MPs urge the government to consult on a compulsory system of certifying the truth of the environmental claims made by lenders.
Activists have pointed at the discrepancy between banks and other firms pledging themselves to Net Zero goals, but at the same time persevering with carbon-heavy business models including lending to extractors of fossil fuels. On Earth Day this morning, seven protestors were arrested at HSBC’s London headquarters, after the bank’s windows were smashed.
Oil and gas companies face increasing pressure from divestment motions tabled by protestors and activist shareholders. Many demands centre on pension funds managed on behalf of civil servants and other public sector employees.
Today’s report highlights the Treasury’s contradictory messages to pension holders. Whitehall’s rules on sustainable pensions say climate-conscious pension investors should not be forced to move their pots out of default funds. But, the committee notes, Whitehall’s most powerful ministry also permits the default funds offered to public employees to continue without offering any sustainable or fossil-free option.
The report ‘Net Zero and the future of green finance’ lays out MPs’ expectations of the government’s delayed ‘Net Zero Review’, its financial assessment of costs necessary to meet promised cuts of 78% in the UK’s carbon emissions by 2035.
The government’s proposal is due later this year. The MPs say it must set out a financial route map, laying out the principles of how the UK will fund the country’s transition to Net Zero. “Clear sectoral pathways” must be included, identifying how high carbon industries such as cement and glass can be eased into low emissions.
The Treasury committee’s report is here.
