157. Across these areas of development for standards - transition plans, taxonomy, rules to avoid greenwashing, and stewardship - authorities should consider proactively how to align them internationally. Ideally this would be in the form of consistent standards as far as possible, or where needed a mechanism to recognise compliance with overseas standards that are delivering the same outcomes. The international character of finance means that the UK is competing with other countries for finance to support the transition. We've heard from the financial services sector that:
"We cannot overstate the importance of a clear taxonomy that is harmonised, where appropriate, with other jurisdictions. As this will facilitate cross-border sustainable finance and lower compliance costs for firms operating in the UK but headquartered overseas." - Societe Generale137
158. The UK should draw on its leadership in this field to shape standards internationally and adopt agreed ones as appropriate.
159. The greater clarity and certainty for the financial sector over standards needs to be complemented by greater clarity and certainty over the interoperability between different regimes. The Sustainability Disclosure Requirements (SDRs) is a first step in linking up disclosure requirements for climate-related financial risks and transition plans. As both those areas evolve, and disclosure requirements on nature-related risks develop, it is important for government and regulators to clarify how different requirements relate to one another, ensuring that they align in terms of key parameters, such as the scope of the companies captured. This will require cooperation across a number of government departments (HMT, BEIS, DWP) and financial regulators (FCA and FRC).
160. While the focus of green finance to date has been primarily on climate change, that has started to shift, with consideration given to nature-related financial risks and opportunities. For example, nature-based solutions are developing as an asset class in their own right, and the Taskforce for Nature-Related Financial Disclosures (TNFD) has been developing a disclosure framework to complement TCFD on the nature side. As the framework and ecosystem for green finance evolves, government should review how that framework needs to develop to encompass nature as well as climate.