British business need to brace for a true test of green credentials

The impact of climate change has been starkly illustrated this week.

In Sydney pictures of sharks swimming in train station subways following six months of rainfall in a matter of hours only illustrates the way in which the world’s weather patterns are changing.

In the UK there are predictions of the hottest July on record with weather experts saying there will be a four week heatwave with temperatures hitting the mid 30s in the coming weeks.

The drive to net zero and the world’s fight to limit global warming has put ESG at the top of the agenda for every business. In the UK the regulators and government are keen to see targets met, but have this week warned they will not take kindly to companies which seek to exaggerate their efforts.

The outgoing head of the UK’s Environment Agency has warned that what she described as “rampant greenwashing” is create a false dawn in the UK’s efforts to tackle climate.

Speaking at a conference this week Emma Howard Boyd said the country’s efforts to hit its net zero targets were being out in peril by the lack of transparency which is leaving the door open for firms to make claims which their data would not support.

As such she has said there needs to be a clear set of data standards that firms will be required to deliver which will give a true picture of their green credentials.

“The more businesses are transparent about their plans to transition to net zero and prepare for climate shocks, the easier it is to benchmark best practice, set standards and celebrate the companies that really are delivering on their commitments,” she is expected to say today.

“If we fail to identify and address greenwashing, we allow ourselves false confidence that we are already addressing the causes and treating the symptoms of the climate crisis.”

Howard Boyd added: “Such action will require collaboration between the public and private sectors. Around the world, just 5%of climate finance goes towards resilience and virtually none of that comes from the private sector.”

She also warned UK banks and insurers will end up taking on nearly £340 billion worth of climate-related losses by 2050 unless action is taken to curb rising temperatures and sea levels.

The UK’s financial regulator has been keen to get its teeth into the issue of greenwashing. The Financial Conduct Authority has stated on numerous occasions that it is keen to see ESG data fall within its remit.

Its view is that if the requirements were part of the regulatory regime companies would need to be clear on its ESG efforts.

What is abundantly clear that authorities are growing increasingly concerned with the threat of greenwashing and its potential implications for the world’s efforts to tackle climate change.

The expectation, in the UK at least, is that firms need to prepare to come under increasing regulatory scrutiny over their ESG performance and ensure their public statements match their true achievements.

Jon Guy,

Editor, Emerging Risks