Rishi Sunak plans to force hundreds of companies to go green in new climate change drive
Hundreds of Britains biggest firms will be forced to go green under controversial plans to tackle . will today unveil wide-ranging proposals to rewire the economy towards reducing global warming. The package will see trillions of pounds of assets controlled by the City of redirected away from carbon-intensive sectors like coal and oil towards initiatives such as electric car batteries. But it will also impose requirements on all UK-listed companies to set out proposals to transition towards net zero in the coming decades, with firms assessed annually against their published plans. Those that fail to make enough progress, or whose plans are deemed too weak, could face sanctions including fines or even removal from the stock exchange. Critics of Mr Sunaks plans fear they could lead to firms quitting the City of London to avoid the red tape. The move comes after years of uncertainty for the financial centre in the wake of Brexit and the upheaval caused by Covid-19, which among other factors has seen millions of employees working from home rather than the heart of the City. Ministers hope the scheme will lead to a rapid shift away from investment in polluting industries and help drive progress towards the Governments target of making the UK carbon neutral by 2050. The Treasury said the plan would make the City the worlds first net zero-aligned financial centre. But the compulsion is likely to prove controversial with some, and could have big consequences for firms in sectors such as oil, gas and mining BP, Shell and mining giants Rio Tinto and Glencore are among those listed in London. The Confederation of British Industry gave the idea a cautious welcome last night, saying that business was already upping its game. But the trade body warned it was vital ministers work with colleagues abroad to produce globally consistent rules to prevent British-based firms being penalised. City veteran Alasdair Haynes, chief executive of stock exchange Aquis, said it was good that climate disclosures are put into companies reports and accounts, but warned: You have to have proportionality. A lot of fast-growing companies are facing high costs to complete their reporting, especially when you look at the detail of whats needed. Mr Sunak will unveil the plans today at the Cop26 climate summit in Glasgow. He will say that as one of the worlds biggest financial centres, the UK has a responsibility to lead the way on the issue. A deal with 450 of the worlds biggest banks, pension funds and insurance firms will see almost 100billion worth of assets begin to transition to lower carbon sectors. The Chancellor has faced criticism from green groups over his approach to climate change, with Greta Thunberg insisting his Budget decision to cut taxes on domestic flights showed that the issue was not his main priority. At present, firms are under no obligation to go green. A recent assessment found that barely half of all companies on the FTSE 100 have so far made any commitment to move to net zero. Under the new arrangement, a transition plan taskforce. composed of industry and academic leaders and regulators. will draw up standards that the plans must meet. Sources said the quango is designed to prevent firms greenwashing their records by adopting meaningless pledges. The rules will be introduced in 2023 following consultation with business. Rain Newton-Smith, CBI chief economist, said the moves were steps in the right direction but that it was critical they did not apply only in the UK. These need to be followed up with further action from policy makers to develop globally consistent climate and sustainability disclosure standards, she said. Sam Alvis, of the Green Alliance, said trillions of dollars are still flowing to fossil fuels every day and voluntary measures have not got us far enough. He added that the new system would have to have strict criteria with legal bite. The arrangement, known as the Glasgow Financial Alliance for Net Zero, will see firms responsible for 40 per cent of all global investment sign up to net zero goals.