Emma RadmoreThe Treasury Committee, as part of its inquiry on decarbonisation and green finance, is concerned that consumers need better help to understand the carbon footprint of financial products and has written to BoE and FCA asking them to consider how they might help with this. It is considering whether there could perhaps be a rating system on financial products, and whether firms should be required to hold additional capital against assets that are particularly exposed to climate risk. Andrew Bailey and Mark Carney have responded to the letters. The letter to FCA (sent in October) references a complaint by the Association of Member Nominated Trustees about the alleged failure of the fund management industry to allow pension scheme trustees to operate a stewardship policy governing the ESG of the companies in which they invest via fund managers. Andrew Bailey said FCA was keen to support the development of common approaches, while Mark Carney noted that there are impediments to a “brown-penalising factor”, which BoE is considering. The regulators also noted the current lack of clarity on whether products are aligned to achieving net-zero emissions by 2050, and noted that many carbon-related assets will not be viable if net-zero commitments are realised.
