The UK is a leading global financial centre. As such, it has a responsibility that downstream negative social and environmental impacts are effectively understood and minimised. Considerations of both sustainability risks and opportunities is an increasingly mainstream investment practice. In the UK, the government has the opportunity to enhance our understanding of the impact of the financial sector on people and planet, and ensure that sustainability integration is standard investment practice.

1. Integrating sustainability into the pensions review: The Chancellor’s Mansion House speech highlighted pensions as a key driver of sustainable finance. Sustainability must be a key part of the ongoing Pensions Investment Review, given the clear economic case. For example, according to research from UKSIF, around £15.2bn of the approximately £88bn in fossil fuel assets held by UK pension funds are at risk of being stranded by 2040 if current policies and pledges are fulfilled.

2. Understanding and regulating the impact of the financial sector: We are still a long way from fully understanding the impact of the UK financial sector. A raft of disclosure regulations have either been recently implemented or are under discussion. This will be the plumbing that underlies sustainable finance and therefore ensuring it is done correctly is of paramount importance. Focus on SDR, TCFD, TNFD, ESG Ratings Regulation, Green Taxonomy, Deforestation disclosure, Labelling regulations – standardised measurement, metrics and definitions are essential in avoiding the risk of greenwashing.