How the UK can help deliver a global green economy
At CDP we know financial systems have a pivotal role to play in tackling climate change. Across the globe, countries are taking steps towards a low carbon economy and cementing the role of corporates in driving the transition to a green economy.
Evidence of this can be seen with the establishment of the IFRS Foundation’s new International Sustainability Standards Board (ISSB), the increasingly widespread introduction of mandatory disclosure regulation in countries across the world and the increasing uptake, both voluntary and mandatory, of the Task Force on Climate-Related Financial Disclosure’s (TCFD) framework, which as of 6 October 2021 had over 2,600 supporters globally including 1,069 financial institutions responsible for assets of over $194trn.
Environmental disclosure has become a key driver of the green economic transition – with the mantra that what gets measured gets managed. It is also an expected business norm, demanded by policymakers, capital markets and customers, with tangible benefits that range from management of risks and impacts to brand value and regulatory alignment.
CDP, as the world’s largest environmental disclosure platform and supporter of TCFD, promotes the value of comprehensive, timely, high-quality disclosure that provides information on the impacts of Climate Change to organisations across the world which in turn drives corporate climate action. This is why in 2020 we accepted a grant from the UK Government to support China’s transition towards a ‘green economy’. The United Kingdom Partnering for Accelerated Climate Transition (UK PACT) funds projects with the aim to accelerate countries’ transition to a low carbon economy.
Finance is central to China’s attempts to green its economy, meet its energy and climate goals and recover from Covid-19. The UK PACT China project is intended to support the establishment of green finance in China through building a better regulatory environment, enhancing the disclosing capacity of the markets, and driving wider transparency. Through the partnership with UK PACT, CDP created a pilot platform between financial institutions in the UK and China where an exchange of ideas about TCFD-aligned disclosure could take place.
The pilot group was made up of organisations from the UK and China Standard Chartered, Fidelity International and BT Group, Bank of China and Postal Savings Bank of China, Hua Xia Bank, Industrial Bank, Xiamomi, ZTE. The UK PACT China project has successfully driven better transparency in Chinese financial sectors and capital markets with an increase of over 20% in the number of Chinese financial institutions and listed companies disclosing through CDP in 2021 and since the inception of the project. There are also now 36 organisations in China signed up to support the TCFD framework, 26 of whom joined in 2021.
This pilot group is part of a larger partnership between UK PACT and CDP, which includes working with policymakers, financial intuitions and corporates in Southeast Asia, Brazil as well as China to promote the value of disclosure. The project has helped financial institutions to measure and understand their impact on the climate through CDP’s standardized platform, allowing them to create more impactful climate resilience. This partnership comes at a crucial time and shows that countries should not tackle the climate crisis in silos, but instead must work together and share knowledge to ensure globally we can remain on the pathway to 1.5°C.
Read CDP’s progress report to find out more about the China-UK PACT pilot programme.