Policy in practice: ESG update

In this episode of policy in practice, David Gauke, Rachel Richardson and Gavin Haran consider the current state of ESG policies and sustainable finance.

Together they discuss:

  • the UK's progress in green finance since the 2021 COP26 summit;
  • recent ESG developments including the government's nature markets framework and the Transition Finance Market Review;
  • Europe's Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS); and
  • what the future holds for ESG policy.

If you would like more information or want to discuss any of the topics in this podcast, please get in touch with David, Rachel and Gavin

Episode summary

In the latest policy in practice podcast, David Gauke, head of public policy at Macfarlanes, is joined by Rachel Richardson, head of ESG, and Gavin Haran, head of policy for asset management, to discuss the current state of ESG policy and sustainable finance.

The discussion begins with an overview of the UK's progress in green finance since the 2021 COP26 summit, noting that although the UK was initially a leader, there have been setbacks and inconsistent advancements due to political changes. The discussion highlights the updated green finance strategy, the ongoing development of the green taxonomy, and the regulation of ESG ratings as significant areas of focus, despite uncertainties surrounding their implementation timelines, especially with an upcoming election.

The conversation shifts to recent ESG developments, including the government's nature markets framework and the Transition Finance Market Review, which aim to increase private investment in nature recovery and support the UK's transition to a low-carbon economy. Rachel emphasises the importance of creating multiple revenue streams from environmental projects and the potential mandatory nature of the Taskforce on Nature-related Financial Disclosures (TNFD). Gavin discusses the regulatory aspects, particularly the impending consultation on mandatory transition plans for businesses, which will likely become crucial for attracting investment and ensuring long-term planning. They also touch on the anti-greenwashing rule, effective from May 2024, designed to prevent misleading ESG claims in marketing materials.

In the latter part of the podcast, the discussion broadens to include international perspectives, particularly Europe's Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), which present challenges and costs for businesses. The team also explores the impact of the anti-ESG movement, particularly in the US, where political opposition and legal challenges to SEC's climate disclosure rules have created significant uncertainty. In contrast, the UK's approach, despite some political shifts, shows a bipartisan consensus on the importance of ESG, albeit with differences in emphasis and fiscal constraints.

The podcast concludes with predictions on future ESG focus areas, including transition finance, disclosure, assurance, and the impact of political uncertainty on greenwashing and reporting standards.

If you would like a full written transcript of this podcast, please get in touch.

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