ESG round-up: FCA delays consultation on UK answer to SFDR

The latest developments in sustainable finance: Updated climate commitments from PFZW, BTPS; and Railpen has 1% Paris-alignment in portfolio according to TCFD report.

The UK’s Financial Conduct Authority has delayed a consultation on its answer to the EU Sustainable Finance Disclosure Regulation (SFDR) by at least one quarter to “allow [it] to take account of other international policy initiatives and ensure stakeholders have time to consider these issues”. The FCA has already put out a discussion paper on the Sustainability Disclosure Requirements and had planned to consult in Q2, but said that it would now not be consulting until autumn. A spokesperson for the FCA said it did not envisage there would be a major delay to the regulation.

This week has seen climate commitments from several UK and European pension funds. Dutch healthcare workers fund PFZW committed to halving its portfolio emissions by 2030 and ensure all its infrastructure and real estate investments are Paris-aligned by the same date. The UK’s BT Pension Scheme announced plans to target a 25 percent cut in Scope 1 and 2 emissions across equity and credit and 33 percent across real estate by 2025, with higher, but undisclosed, targets for the utility, oil and gas, steel and transportation sectors. Meanwhile workplace pension provider Smart Pension is targeting net zero by 2040 and a 50 percent cut in emissions by 2025 for its default fund.

Just 1 percent of Railpen’s portfolio is invested in Paris-aligned companies, the £37 billion pension scheme has disclosed in its latest TCFD report. The scheme warned that “very few companies are as of today taking sufficient action to align to a net zero pathway”, although it noted that half of companies had made a commitment. The report also raises concerns around data quality, warning that gathering Scope 3 data remains a challenge for a number of reasons. Railpen has cut its public markets emissions by 9.25 percent against its baseline year, driven, it said, by “an investment decision”.

The chair of the UK’s Environment Agency has warned that corporate greenwashing is “storing up risk” for investors by giving a false impression they are addressing the climate crisis. Speaking at a conference on Monday, Emma Howard Boyd said that the more transparent businesses are about their plans to transition to net zero and manage climate risk, the easier it is to establish best practice and set standards. “If we fail to identify and address greenwashing, we allow ourselves false confidence that we are already addressing the causes and treating the symptoms of the climate crisis,” she added.