New report urges UK and US to lead the world in climate-related financial services regulation
UK and US regulators need to urgently increase collaboration to support the development of global standards in climate-related financial services regulation, according to a new report launched today [24 May] by the City of London Corporation.
Data, Direction, Dialogue: opportunities for UK-US collaboration on climate-related financial services regulation presents a series of opportunities and recommendations for UK and US policymakers, outlining the unique opportunity the two countries have to lead the world in climate regulation and data.
The report launch comes as City Corporation Policy Chair Catherine McGuinness embarks on a virtual visit to the US, where she will meet with regulators and urge them to act on the recommendations in the lead up to the G7 meeting in June and COP26 in November. The recommendations include:
- Climate Data: High-quality science-based data is the building block to effective climate regulation. The UK and US should collaborate to ensure that climate data is reliable, comparable and verifiable.
- Disclosure Frameworks: The UK and US should collaborate to develop standardised climate-related FPS disclosure frameworks.
- Climate Metrics and Risk Assessment: The UK and the US should work to establish and include comparable metrics and risk assessments within climate-related financial services regulation.
- International Collaboration: The UK and US should advocate urgently for maximum collaboration in the development of globally consistent standards which leverage existing structures. There are numerous possible pre-existing routes to achieving such coherence.
City of London Corporation Policy Chair Catherine McGuinness said:
“Financial regulation is a key part of the toolkit in fighting climate change, enabling financial firms to address climate challenges whilst maintaining safe and efficient global markets.
“The UK and US have a unique opportunity to lead the world in climate-related financial services regulation, pushing forward international discussions on data, disclosures and metrics with a view to gaining consensus on global standards.
“Achieving net zero will require unprecedented levels of finance, but also greater global cooperation. I therefore urge regulators on both sides of the Atlantic to take forward the recommendations outlined in this report.”
The Government’s independent Climate Change Committee has said that in the UK alone, a five-fold increase in investment in low-carbon technologies and infrastructure is needed to achieve net-zero targets, from around £10bn per year in 2020 to £50bn in 2030. In its 2020 report the road to net finance, it says the UK should fully integrate climate risk and net zero into financial regulation and monetary policy. Climate financing is part of the UN Paris Agreement, which calls for “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.
Notes to editors
The City of London Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally-successful UK. www.cityoflondon.gov.uk