UK to Launch First Green Bond in 2021 | Chief Investment Officer

The UK is planning to sell its first sovereign green bond in 2021 in a move to help the country meet its target of achieving carbon net zero by 2050. The initiative was announced by Chancellor of the Exchequer Rishi Sunak.

“Our plans will ensure the UK moves forward as an open, attractive, and well-regulated market, and continues to lead the world in pioneering new technologies and shifting finance towards a net zero future,” Sunak said in a statement.

The announcement comes ahead of the 26th United Nations Climate Change Conference of the Parties (COP26), a global summit that’s set to be held in Glasgow next year. It was originally scheduled to be held this week but was postponed a year as a result of the coronavirus pandemic.

According to the UK government, it will become the first country in the world to make disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) fully mandatory across its economy by 2025.

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The UK also said it will follow up next year’s green bond with a series of additional issuances to meet growing investor demand for sustainable instruments. It said the bonds will help finance projects that will tackle climate change, create green jobs throughout the country, and finance infrastructure investment.

Sunak also announced that the government is introducing more “robust” environmental disclosure standards so investors and businesses can better understand the material financial impacts of their exposure to climate change, price climate-related risks more accurately, and support the transition to a green economy.

On Nov. 9, the UK government released its joint Government-Regulator TCFD Taskforce interim report, which includes a “road map” for implementing mandatory disclosures, many of which will come into effect by 2023. The rules and regulations pertain to listed commercial companies, UK-registered large private companies, banks, building societies, insurance companies, UK-authorized asset managers, life insurers, Financial Conduct Authority (FCA)-regulated pension plans, and occupational pensions.

The UK will also implement a framework for determining activities that can be defined as environmentally sustainable, which it said will help improve understanding of the impact of a company’s activities and investments on the environment. The government also said it will join the International Platform on Sustainable Finance to support and benefit from the development of common international standards.

According to research firm BloombergNEF, the green bond market has grown beyond $1 trillion issued since the securities began trading in 2007. The firm also said that more than $200 billion worth of green bonds were issued during the first three quarters of 2020, which is a 12% increase compared with the first nine months of 2019.

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Tags: Financial Conduct Authority, Green Bonds, Rishi Sunak, Task Force on Climate-Related Financial Disclosures (TCFD), TCFD, UK

Former Wells Fargo CEO and Chairman John Stumpf has agreed to pay the US Securities and Exchange Commission (SEC) $2.5 million to settle charges that he misled investors about the success of Wells Fargo’s core business, Community Bank.

Wells Fargo has already forked over $500 million to settle SEC charges related to the matter, and the regulator said it will combine Stumpf’s fine with that money to distribute to harmed investors. Stumpf neither admitted nor denied the SEC’s charges.

According to the SEC’s order, in 2015 and 2016, Stumpf allegedly signed and certified statements that were filed with the regulator regarding Wells Fargo’s Community Bank cross-sell strategy and its reported metric that the SEC said he should have known were misleading. The SEC also alleged Stumpf failed to assure the accuracy of his certifications even after being put on notice that Wells Fargo was misleading the public about the cross-sell metric.

“If executives speak about a key performance metric to promote their business, they must do so fully and accurately,” Stephanie Avakian, director of the SEC’s Division of Enforcement, said in a statement. “The commission will continue to hold responsible not only the senior executives who make false and misleading statements but also those who certify to the accuracy of misleading statements despite warnings to the contrary.”

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The SEC has also filed charges against Carrie Tolstedt, the former head of Wells Fargo’s Community Bank, alleging that she joined Stumpf in making misleading claims to investors.

According to the SEC’s complaint against Tolstedt, from mid-2014 through mid-2016, she allegedly publicly described and endorsed Wells Fargo’s cross-sell metric as a means of measuring Wells Fargo’s financial success. However, the SEC claims the metric was inflated by accounts and services that were neither used, needed, nor authorized. The complaint also alleges Tolstedt signed misleading sub-certifications as to the accuracy of Wells Fargo’s public disclosures that she either knew, or should have known, were materially false and misleading.

“Tolstedt publicly described the cross-sell metric as a means of measuring Wells Fargo’s relationships with its customers,” the SEC said in its complaint. “Yet, as Tolstedt knew or was reckless in not knowing, the cross-sell metric appeared to be growing for years as it captured growth in products that resulted from rampant sales misconduct rather than measuring products that customers wanted, needed, and used.”

The SEC has charged Tolstedt with violating the antifraud provisions of the federal securities laws and is seeking a permanent injunction, civil penalties, disgorgement with prejudgment interest, and an officer-and-director bar.

Enu Mainigi, Tolstedt’s lawyer, said in a statement that “it is unfair and unfounded for the SEC to point the finger at Ms. Tolstedt when her statements were not only true but also thoroughly vetted by others as part of Wells Fargo’s policies, procedures, and systems of controls.”