Financial Services Bill update: Peers make case for climate and nature
- Peers for the Planet
- Jun 9
- 3 min read
A new Bill proposing major reforms to UK financial regulation and banking is currently making its way through Parliament.
Yet despite the wide-ranging reforms contained in the Financial Services and Markets Bill, there is no mention of climate change or nature issues. That is a missed opportunity to help deliver the Government's ambition for the UK to become the sustainable finance capital of the world.
Achieving that ambition will require a financial system that not only supports growth and investment, but also mobilises capital for the transition to a climate and nature positive economy and helps build resilience to the growing risks posed by climate change.
It was really inspiring to see @Peers for the Planet cross-party supporters making that case during yesterday's Lords debate covering climate and environment 'have regards', Paris-aligned transition plans, the need to address deforestation financing and and nature-related reporting.
As the Bill progresses, there is still an opportunity to strengthen it by recognising the importance of climate and nature to our long-term economic prosperity and financial stability.
Please do get in touch if you would like to work with us on this.
The Climate Change Committee and the Bank of England both warn that these types of risks can have tipping points, which could have serious implications for the UK’s financial stability, our ability to avoid or manage sudden shocks to the market, and long-term economic resilience. Some aspects of the financial ecosystem are particularly vulnerable. For instance, we are already seeing the effects on the insurance markets of drought, flooding, coastal erosion from sea level rises and extreme weather. We have seen the problems that arise from that for mortgage lending, affordability for homeowners, and infrastructure and supply chains in the UK and globally. Baroness Hayman
To help build such a purposeful industry should be the goal of this legislation. It is a profoundly important goal, partly because, as the noble Baroness, Lady Neville-Rolfe, said, this is the jewel in the UK’s economic crown. But it is more than that: we need a successful finance industry if we are going to solve the critical problems of the country and the world: growth, prosperity, looking after people in old age and, as the noble Baroness, Lady Hayman, was saying, addressing the growing climate challenge. Lord Pitt-Watson
The Financial Services and Markets Act 2023 requires that the Treasury “carry out a review to assess the extent to which regulation of the UK financial system is adequate for the purpose of eliminating the financing of the use of prohibited forest risk commodities”— a commitment to make sure that we deal with the issue of forest products. I ask the Minister whether the review committed to in that Act is happening and, if not, why not and when it will be undertaken, because its results could have been in this Bill by now. I urge the Minister, at the very least, to persuade his colleagues in other government departments to lay the regulation under Schedule 17 to the Environment Act, which would make it illegal to use commodities in the UK that have been produced on illegally deforested land. This would at least be a step in the right direction. Baroness Young of Old Scone
The deletions in the Bill take out regard for climate change, the need to focus on sustainable growth and the need to be compliant with the Climate Change Act, as the noble Baroness, Lady Hayman, mentioned. Yet, as the noble Baroness, Lady Young, said, the UK remains well positioned to capitalise on its reputation as a hub for sustainable finance. I would go further, however: we need now to be acutely aware of climate risk; therefore, we should be strengthening, not weakening, the rules here. Baroness Northover
The Financial Services and Markets Bill will begin Committee Stage in the House of Lords on Monday 22nd June 2026.
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