The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, Her Majesty’s Government have endorsed the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures and encouraged all publicly listed companies to implement them. We are seeking views on companies’ ability to apply these recommendations with consistency through the work of the green finance task force and the recent streamlined energy carbon reporting consultation.
Baroness Featherstone (LD)
But that is voluntary. Do the Government agree with big investors in the UK economy such as Aviva that climate disclosures should now be mandatory, to set the pace for innovation and ensure that the UK secures competitive advantage amid the global race to green the financial system?
Lord Henley
My Lords, that is one view. It was looked at by the Environmental Audit Committee inquiry on green finance, which sought evidence on the effectiveness of the TCFD’s recommendations and the Government’s role in supporting their implementation. There is broad consensus among stakeholders that companies will certainly require more time to implement the recommendations but some have recommended making disclosure mandatory within, say, two to three years. The Government have not yet taken a view on this matter and will consider it in due course.
Baroness Jones of Whitchurch (Lab)
My Lords, it is estimated that listed companies account for around a quarter of global carbon emissions, with oil companies obviously among the biggest polluters. Therefore, does the Minister agree that investors should have a responsibility to demand that those sorts of multinationals, in addition to individual countries, sign up to the Paris Agreement and set out their business strategy for a net zero-emissions world? That is the only way that we are going to tackle this issue on a global basis and ensure that we protect shareholder investment.
Lord Henley
My Lords, I accept what the noble Baroness is saying: that is very useful information for investors and others who are interested in what the companies are up to. We explicitly ask for feedback on those TCFD recommendations and whether they should be mandatory in the long run. However, one has to balance against that the fact that it potentially imposes a burden on businesses, and one would have to look at how exactly that should be done. At the moment it is not mandatory. We will consider that in due course, but at the moment it is best that we analyse the responses we have had to the various consultations and then come forward with our recommendations.
Viscount Ridley (Con)
Does my noble friend agree that climate-related financial disclosures should take into account the fact that the consensus among climate economists and, indeed, in the Intergovernmental Panel on Climate Change, is that the economic impacts will be positive for the next 40 or 50 years?
Lord Henley
My Lords, my noble friend makes another point. If these impacts are going to be beneficial, there will be an even greater reason for companies to wish to list them in their financial disclosures. As I said in response to other questions, whether we make them mandatory is obviously a matter we want to consider in due course.
Lord Teverson (LD)
My Lords, the City recently released an excellent report, Fifteen Steps to Green Finance. One of its recommendations was that the UK should set up a green finance standards board. That would enable this country to take that sector of the finance market and call it its own, set standards globally and make sure that issues such as greenwash did not undermine that concept. Will the Government take that on? Should they not do it urgently to make sure that we corner that market globally?
Lord Henley
My Lords, that is something else we can consider. Quite a lot of task forces and other boards exist at the moment; the Question itself relates to the task force on climate change and financial disclosure, set up by the Bank of England, and there is our own green finance task force. There is also the consultation I referred to earlier—consultations seem to be coming out of our ears. But I will certainly look at what the noble Lord said; whether it is right to set up yet another body is another matter.
Baroness McIntosh of Pickering (Con)
My Lords, the Secretary of State for BEIS has given conditional approval to Third Energy to hydraulically fracture in North Yorkshire, very close to or under the national park. What checks are being conducted into the financial probity of Third Energy, which has failed to lodge its accounts for the last financial year?
Lord Henley
My Lords, I would rather not answer that question without notice. It goes slightly beyond the Question on the Order Paper, but I will certainly write to my noble friend about it.