The Treasury Committee has called for an end to financial greenwash, with financial “clearly labelled” to allow consumers to assess their relative climate impacts.

The report further asks that the Treasury and the Financial Conduct Authority (FCA) should make such green labels mandatory.

On World Environment Day in June 2019, the Treasury Committee launched an inquiry into decarbonisation and green finance to scrutinise the role of HM Treasury, regulators, and financial services in supporting the Government’s climate change commitments. It has now published its report: Net Zero and the Future of Green Finance.

The Committee report highlights the greenwashing issue in particular, but the report also seeks to accelerated develops in green finance and should further FinTech challenges, which it launched in 2018 to develop innovate products and services to assist the transition to a greener economy, to encourage innovation.

Commenting on the report, Mel Stride, chair of the Treasury Committee, said: “The Government, private finance, consumers, and regulators all have vital roles to play in helping the UK to achieve net-zero carbon emissions by 2050. Today, on International Mother Earth Day, we’ve made a series of recommendations to the Government and associated public bodies for how the UK can achieve its climate change commitments.”

The Committee report also recommends that the Treasury’s Net Zero Review final report should include clear sectoral pathways towards decarbonisation and should address the key policy decisions as to the future of high carbon industries. Particular attention should be given to the potential regional impact of those decisions and the Government should set out a framework and strategy for supporting those communities which will be most impacted by these changes.

The report considers the contradiction in pensions, where savers in defined contribution pension schemes are invested in their pension’s default fund, which is the fund used should the saver fail to make an alternative investment choice. Although these funds are not automatically moved to greener alternatives, the Government maintains that consumers should not have to switch out of the default fund to invest sustainably. The report asks the Government to resolve this apparent contradiction. It should also report on the proportion of pension holders in defined contribution pension schemes who remain in the default fund, and the extent to which those default funds are aligned with a path to Net Zero.

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