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UPDATE 2-Bank of England says company disclosures on climate risks will be mandatory

Fri, 16th Oct 2020 11:39

* TCFD disclosures to become mandatory - Hauser

* Hard incentives now to issue green gilts - Hauser
(Adds more detail)

By Huw Jones

LONDON, Oct 16 (Reuters) - Current rules on company
disclosures to help markets price in risks from climate change
will become mandatory, a senior Bank of England official said on
Friday.

It is the latest push in the financial sector to harmonise
standards globally so that investors can better compare and
track how companies are shifting to a lower-carbon economy and
for asset managers to make more informed decisions.

Currently, regulations and rules vary widely across the
world, detailing what information companies need to provide.

"Disclosing your plans can improve your credit rating,
broaden your investor base, reduce your cost of finance, and
economise on the fixed costs of meeting increasingly vocal
investor requests for information," the BoE's executive director
for markets, Andrew Hauser, told an Investment Association
online event on Friday.

Britain, along with other countries, has been applying
principles for companies on a voluntary basis from the global
Taskforce on Climate-Related Financial Disclosures (TCFD).

"You can expect it to become mandatory," Hauser said.

But TCFD was not granular enough to rigorously compare
companies and more forward-looking measures were needed, he
said.

He singled out three key building blocks to help do this to
achieve the goals of cutting carbon emissions.

Standard setters needed to agree on a single, mandatory
framework for companies to disclose risks from climate change,
he said.

More tools were needed to provide incentives for green
investment, and consensus on terminology for asset-allocation
strategies to provide a "clear and credible" choice for
investors, Hauser said.

"For much of the past decade, those three building blocks
have been slow to develop, or vulnerable to charges of
‘greenwashing’ or projects, vehicles or investment strategies
that are ‘green’ in name only," Hauser said.

More countries have begun issuing green sovereign debt and
the UK Debt Management Office is considering such a move, Hauser
said.

"There is are some pretty hard incentives that other
governments have embraced... In sovereign green bond issuance in
the last three to four months there has been an explosion,"
Hauser said.
(Reporting by Huw Jones; editing by Andy Bruce, Larry King)

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