According to new rules announced by Chancellor Rishi Sunak, some large companies will now be required to report on their environmental impact.
This reporting will be mandatory for certain large businesses as well as pension schemes and investment products.
This means a company’s sustainability claims will have to be justified clearly and their net zero transition plans properly set out.
It is hoped that this will allow people to make more “environmentally-led decisions” by choosing to support businesses and companies which are acting sustainably.
Chancellor Rishi Sunak stated:
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.
This may also help to combat greenwashing – a term which describes misleading investors and consumers about how green a product or business really is.
The exact rules surrounding which businesses will be expected to comply with this new rules and when this will take place is still unknown.
However, a new report released by the Treasury outlines the legislative and regulatory changes that will be made across the economy to “arm investors and consumers with the right information by setting standards on environmental sustainability reporting”.
Speaking to the BBC, Heather McKay from independent climate change think tank E3G, stated that the Government needed to send out clear signals regarding “what is green and what is not” to make sure companies are kept accountable for changing how they operate.
This comes as many companies are already altering their policies to ensure they are environmentally-friendly.
The UK’s current target is to reach net zero carbon emissions by 2050 with the 26th UN Climate Change Conference of the Parties (COP26) taking place in Glasgow in November 2021.