Investments: Environmental, Social and Governance Criteria

Lord Tunnicliffe Excerpts

Wednesday 2nd March 2022 Lords Chamber

[Baroness Penn (Con)]

The noble Baroness is absolutely right. We are aware of the huge energy use that can be involved in these currencies. The UK is developing a green taxonomy, which will make us the first country in the world to make disclosures aligned with our Paris and other commitments mandatory economy-wide, including the financial-services sector. That will bring transparency over the climate impacts of firms’ activities and allow the market and consumers to respond accordingly.

[Lord Tunnicliffe (Lab)]

My Lords, in recent days, we have seen a variety of organisations announce their intention to divest from investments in, or associated with, Russia. This is a welcome response to Vladimir Putin’s ongoing and flagrant breaches of international law in Ukraine. While it is not for government to dictate how private organisations invest their money going forward, what steps are Ministers taking to promote investment opportunities that are greener, socially responsible and likely to be of long-term economic benefit to the UK, as well as our friends and neighbours?

[Baroness Penn (Con)]

The work that we are doing to green finance and green our economy means that there will be far greater transparency on the impact of firms on climate change and the wider environment. This will allow firms to make those kinds of decisions. The noble Lord talked about divestment. In terms of our approach or view on that with regard to climate activities, we expect investors to use SDR disclosures to integrate climate into stewardship activities. That may eventually lead to divestment, but beforehand, they may use their position as investors in major companies to encourage them to greener positions before considering divestment altogether.