The UK investment management industry is calling on the G7 countries to do more to tackle climate change by committing to improve companies’ reporting on the climate-related risks they face.

The proposed changes would see the world’s largest economies implement mandatory climate-related risk reporting for companies against a standardised set of principles. With UK investment managers investing £3.7trn in overseas equities, governments and non-sterling bonds, it is vital that such risks are reported in a clear and consistent manner, so managers can help companies transition to a more sustainable future and take informed investment decisions on behalf of savers.

In a letter sent to the UK ambassadors and High Commissioners of the countries taking part in this year’s G7 Summit, the Investment Association (IA), which represents the UK’s £8.5 trillion investment management industry, outlined the following measures it wants G7 countries to agree to at the upcoming summit:

1. Support for the IFRS’ Sustainability Standards Board to work at pace to develop sustainability reporting standards and increased cooperation between national regulators to endorse and implement these standards.
2. For national regulators to commit to implementing mandatory economy-wide reporting on international Task Force on Climate-related Financial Disclosures (TCFD).
3. International common standards to be agreed on green gilts by governments and national regulators.
4. Governments to set out at a high level sector specific pathways to meet the Paris Agreement goals and prioritise providing further detail to reduce the risk of stranded assets.

Chris Cummings, Chief Executive of the Investment Association said: “The meeting of the G7 is a prime opportunity for the world’s largest economies to take a coordinated, global approach to tackling climate change. As an industry which invests in companies around the world on behalf of both UK and overseas savers and investors, investment managers have a vital role to play in the shift to a more sustainable global economy. Ensuring high-quality and comparable data on the risks that companies face from climate change is key to achieving this and meeting the net zero targets.”

As part of its commitment to tackling climate change, the IA has also publicly stated its support for the Race to Zero and Net Zero Asset Managers initiative. To date, investment managers with more than £5trn of assets under management in the UK have made these net zero commitments.