The Green Technical Advisory Group (GTAG) – which was set up in June 2021 – has released its first report providing a summary of the research and analysis and initial advice to the UK government on the design and implementation of a UK green taxonomy.
Further work completed over the past 15 months will follow before the end of the year, the group said.
The paper is being published by GTAG prior to the release of the government’s anticipated public consultation on the Technical Screening Criteria (TSC) for the first two of the six environmental objectives included in the UK green taxonomy.
The paper – GTAG: Advice on the development of a UK green taxonomy – published last week, summarises the first tranche of the group’s advice, focusing on four key themes:
- how to approach onshoring the EU framework, on which the UK green taxonomy is based, at a time when the UK government has set out a policy ambition to move further, faster than the EU in some areas of climate action;
- optimising the taxonomy’s international interoperability, given 80% of UK managed assets are invested in international capital markets;
- streamlining ‘Do No Significant Harm’ to be usable and useful for reporting entities; and
- setting out a wide range of potential taxonomy use cases.
“As the Committee on Climate Change has made clear, the UK’s net zero policy ambition is commendable, but the focus must now be on delivery. Directing capital to where it is needed most will be a key element of success in mobilising the extra £50bn that needs to go towards low-carbon investment annually, from 2030 to 2050, to meet the Sixth Carbon Budget and in tackling greenwashing,” said Ingrid Holmes, chair of the GTAG.
“Going forward, we would like to see the GTAG’s work continue at pace, with regular transparency on its advice provided to the market and other stakeholders. The government now needs to quickly restate the UK’s commitment to moving ahead with implementing a taxonomy, with further delays leaving the UK further behind the EU and other jurisdictions in its leadership on green finance,” said James Alexander, chief executive officer of the UK Sustainable Investment and Finance Association (UKSIF).
Smart Pension’s default fund becomes fully sustainable
Smart Pension, a UK-based defined contribution master trust, has announced that its default fund is now made up entirely of sustainable components.
Since 2019, the master trust has steadily made its default growth fund, used by more than 90% of its members, more sustainable, incorporating an increasing number of investments with a specific focus on ESG issues.
All the constituent funds that Smart Pension now uses in its default growth fund are rated Article 8 or higher by the Sustainable Finance Disclosure Regulation, a technical standard recently introduced by the European Commission.
The news comes after Smart Pension agreed a biodiversity partnership with AXA Investment Managers, aimed at bolstering Smart Pension’s investments into decarbonisation and companies that are addressing biodiversity loss.
Varma joins science-based targets initiative
In Finland, Varma announced it has signed up to the Science Based Targets initiative (SBTi), an international project setting guidelines for private-sector companies to reduce their own emissions.
Setting scientific goals for companies was important, the €56.7bn mutual pensions insurer said, because on their own the climate goals set by different countries and governments were not considered to be enough to limit global warming to 1.5°C.
Hanna Kaskela, Varma’s director of sustainability, said: “The intergovernmental climate panel IPCC has emphasised that it is still possible to restrict global warming to 1.5°C, but we are dangerously close to the moment when the window to achieve this has closed.”
By committing to the SBTi initiative, she said, Varma wanted to increase the transparency of its operations and ensure its own climate actions were in line with international goals.
In June, Varma said it was tightening its climate policy by adopting a target for reducing the emissions of its investment portfolio on an absolute basis, rather than its former goal of cutting carbon intensity – and also making the new target, which includes carbon-neutrality in 2025, applicable to all its assets.
Up to that point, the emission reduction targets had only been for listed equities and corporate bonds.
GINN to host impact principles
The Global Impact Investing Network (GIIN), the global champion of impact investing, and the International Finance Corporation (IFC), a member of the World Bank Group, plan to transfer the host of the Secretariat for the Operating Principles for Impact Management, a role currently held by IFC, to the GIIN.
The Impact Principles’ signatories voted in early September in favour of the hand-over. The transfer of the Secretariat to the GIIN is expected to be completed in Q4 2022.
The impact principles are the impact investing industry’s leading investor framework for the design and implementation of impact-management systems, ensuring that impact considerations are integrated throughout the full lifecycle of an investment.
Since the framework’s launch in 2019, the impact principles have become the market standard for impact investors, deepening rigour and driving credibility within the financial services industry.