Ahead of the global COP26 environmental conference for world leaders the Chancellor of the Exchequer has called on the investment community to help cement UK’s status as the best place in the world for green investment. The new requirements, which will also apply to pension schemes, investment products, asset managers and owners, are part of the government’s landmark reforms to create a greener financial system, writes Thom Wilkinson, a Partner in our Property and Environmental Law team.
Commercial property investments and prestige residential properties, typically those attracting high net worth overseas investors, will soon be in the spotlight as the investment vehicles in which they sit will need to set out their green credentials to potential investors under new Sustainability Disclosure Requirements (SDRs) outlined by the Chancellor.
The government’s intention is that businesses and consumers will have a better understanding of whether their investments are aligned with Net Zero (by 2050) carbon commitments.
According to the government’s press release around 70 per cent of the UK public want their money to go towards making a positive difference to people or planet. But the lack of common definitions around environmental sustainability is leading to greenwashing, misleading investors and consumers about how green an investment really is.
The new Sustainability Disclosure Requirements (SDR) are intended to ensure investors have the information they need to make informed decisions about where to put their money.
Launching the report, Greening Finance: A Roadmap to Sustainable Investing, the Chancellor said, “We are already a world leader in green finance, and today’s roadmap will give us the opportunity to set new global standards for sustainability that will boost the economy, protect the planet and support our net zero goals.
“We want sustainability to be a key component of investment decisions, and our plans will arm investors with the right information to make more environmentally-led decisions.”
Against the complex backdrop of COVID-19 there is at last some cause for optimism, including a continued commitment to sustainability within the real estate sector.
According to a survey undertaken by the British Property Federation over 70% of respondents said that the delivery of sustainability initiatives continues to be ‘business as usual’ and in some cases activity has increased over the last five months. Furthermore, over 35% of the respondents said that they plan to accelerate activity and investment in sustainability as we emerge out of the pandemic.
It’s not unreasonable to assert that society, and the business community in particular, is beginning to tackle the challenges of living a more sustainable future. At last.
As ever, if you would like to discuss any of the points raised in this article, please do get in contact. Thom Wilkinson is a Partner specialising in Property and Environmental Law and is contactable on Tel: +44 (0)20 4513 6073 or Email: [email protected]
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