16 January, 2024 / Comment
UK sustainability frameworks: Key dates for your diary
By Cat Ommanney, director, SEC Newgate
'There is quite a year ahead in terms of navigating new regulations and requirements'
For those of us following sustainability-related developments in the financial services industry, 2024 has already started with quite a bang.
On the one hand, we have seen tremendous progress: the World Bank has launched a record-setting sustainable development bond, maturing in 2031 and priced at an impressive $5bn; and the Green Finance Institute has published a dedicated toolkit to help British farmers navigate the future of nature markets. From this perspective, at least, we’re moving in the right direction.
On the other hand, however, the political scoreboard looks fairly dismal: former net-zero champion, Chris Skidmore has resigned as an MP in protest at the Tories’ climate policy; and Labour leader Sir Keir Starmer has warned that Labour could further reduce the amount it had pledged to borrow for the party’s “green prosperity plan”. It seems ESG and sustainability aren’t necessarily as high up politicians’ agenda as many of us would like.
For financial services entities that are caught in the middle of it all there is quite a year ahead in terms of navigating new regulations and requirements.
At the end of 2023, the UK made a flurry of sustainability-related policy announcements relevant to the financial sector. In case you missed them, here are some of the key dates coming up.
A phased approach to the Sustainability Disclosure Requirements (SDR)
You’ll remember the four labels which the SDR announced last year: Sustainability Improvers, Sustainability Focus, Sustainability Impact and Sustainability Mixed Goals. Looking ahead in 2024, we should have more guidance on these, as well as the start of implementation.
The FCA will consult on altering the scope of the SDR to apply to portfolio managers.
31 May 2024
The SDR’s anti-greenwashing rule enters into force.
31 July 2024
Firms can apply the latest labels.
Related disclosure requirements become mandatory.
2 December 2024
SDR naming and marketing rules and requirements come into effect.
Finalisation of the UK Sustainability Disclosure Standards (SDS)
A confusingly similar acronym pertains to the UK’s work on developing standards for companies reporting on sustainability and climate-related risks. SDS is expected to form the basis of future legislation on sustainability reporting.
UK SDS to be published.
1 January 2025
SDS come into effect.
Yes, you read correctly, that’s roughly a three to six-month window between publishing and implementation – expect to see a lot of harried-looking staff in December this year.
Development of the Transition Plan Taskforce (TPT) disclosure framework
In October 2023, the TPT released its disclosure framework. Over the next few months, it will be progressing what good practice actually looks like.
Updated guidance on implementing the disclosure framework.
Development of a UK green taxonomy
A personal favourite. Since the UK announced its plan to introduce a green taxonomy, more than 20 taxonomies have been announced or implemented around the world. However, we’ve been delayed for good reason – other taxonomies have already been criticised for green-washing at the outset (EU I’m looking at you). In October last year, the Green Technical Advisory Group published its final advice for developing a UK taxonomy, which is set to be developed this year.
Consultation on the UK taxonomy
Critically, these dates only relate to UK frameworks. A huge number of companies will also need to consider the changes coming into effect across Europe – such as amendments to Sustainable Finance Disclosure Regulation; finalisation and adoption of the Corporate Sustainability Due Diligence Directive, which includes the European Sustainability Reporting Standards; and ESMA’s upcoming updates to its guidelines on ESG and sustainability-related terms in fund names.
Is this the year of red tape? Or the year that improves regulation and reporting, delivering better outcomes across the industry? My money is (optimistically) on the latter. But one thing’s for sure, if last year was the year of preparation, 2024 is the year of sustainable action. Bring it on.
A part of the Mark Allen Group.