Cop 27: Climate disclosure frameworks solidify

A UN-appointed group has set out guidelines to "bring integrity to net zero commitments by industry, financial institutions, cities and regions", it said today at the UN Cop 27 climate summit in Sharm el-Sheikh, Egypt.

The high-level expert group on the net zero emissions commitments of non-state entities, led by Canadian former environment and climate change minister Catherine McKenna, laid out 10 recommendations for organisations to follow.

"Criteria and benchmarks for these net-zero commitments have varying levels of rigour and loopholes wide enough to drive a diesel truck through. We must have zero tolerance for net-zero greenwashing," UN secretary general Antonio Guterres said today.

Organisations must commit to "immediate reductions in absolute emissions", follow science-based targets in the short, medium and long-term and report transparently on their progress "with verified information", the group said. For financial institutions, "this means all financed activities," Guterres noted.

Organisations cannot "claim to be net zero while continuing to build or invest in new fossil fuel supply," the group said. Deforestation is also "disqualifying", it added. Emissions reduction must be absolute, rather than primarily focussed on cutting emissions intensity and it warned against companies buying "cheap [carbon] credits that often lack integrity".

"The absence of standards, regulations and rigour in voluntary carbon market credits is deeply concerning," Guterres said.

All business strategies must be aligned with climate commitments, including linking capital expenditure and executive pay to net zero targets, it recommended.

The UK's Transition Plan Taskforce today published its disclosure framework and guidance for implementation, both of which are open for public consultation until 28 February 2023. The disclosure frameworks, which will ultimately inform UK regulation, are intended by the taskforce as the "gold standard for private sector climate transition plans."

UK regulator the Financial Conduct Authority (FCA) will use the finalised framework to "strengthen their transition plan disclosure expectations of listed companies, asset managers and regulated asset owners," the taskforce said today. The FCA last month consulted on a raft of sustainable finance rules.

"We have seen a wave of private companies announcing their ambitions to contribute to net zero," and they must present "high quality plans to show how they will meet their targets," taskforce co-chair and Aviva chief executive Amanda Blanc said.

The International Sustainability Standards Board (ISSB) - launched at last year's Cop 26 - plans for its requirements to be implemented "as early as possible in 2023". It is working with the European Commission and the European Financial Reporting Advisory Group (Efrag) "to agree as soon as practicable" a framework which matches on key climate disclosures. The ISSB, which has previously said it wants to consolidate the reporting space for climate-related disclosures, is also consulting with regulatory association the International Organisation of Securities (Iosco) in preparation for potential Iosco endorsement.

By Georgia Gratton

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