The Conservative Party has promised to scrap mandatory climate and sustainability reporting requirements and “woke” regulators who tend to do so in a dramatic attempt to increase the number of companies listed on the London Stock Exchange.
Andrew Griffith, the shadow business and trade secretary, said that if the Tories win the next general election they will be “chainsawing” the layers of green and social disclosure rules that, in his words, “have made British businesses less competitive and less agile”.
“If you care about the UK’s competitiveness, someone needs to take a chainsaw approach to the volume of these additional reports. And that someone will be us,” Mr Griffith says.
The plans represent one of the most radical proposed rollbacks of corporate regulation in recent years – and signal a significant shift away from the Labor government’s focus on green finance and ESG transparency.
Under the Conservatives’ proposals, mandatory ESG disclosures, including a company’s carbon footprint, diversity metrics and social governance data, would be made voluntary again.
ESG rules were originally introduced as a voluntary standard that allows companies to demonstrate transparency around sustainability, workplace culture and board governance. However, over the last decade the measures have evolved into complex binding frameworks administered by regulators such as the Financial Conduct Authority (FCA), HMRC and Companies House.
According to the government, compliance costs have skyrocketed: companies spend around £202 million a year on climate-related financial disclosures, plus another £100 million on energy savings and carbon reporting.
A KPMG study found that the average sustainability report is now 83 pages long, up from 70 pages in 2021, with some reports exceeding 200 pages.
“Some of our best companies are hamstrung by having to report against a dense thicket of ESG metrics to be judged by self-appointed activists or regulators,” Griffith said.
Griffith said the Conservatives would also seek to limit regulators’ powers, particularly if ESG requirements were seen as political or subjective.
He argued that excessive reporting and regulation had driven companies out of London, citing rival financial centers such as New York and Singapore as jurisdictions with lower disclosure burdens.
“In the countries where we are losing listings, there is no such thing as extensive reporting,” Griffith said. “There’s no point in being an outlier.”
In the US, Donald Trump’s administration previously scrapped federal ESG reporting requirements, a move that Conservatives see as a precedent for deregulation in the UK.
The policy is part of a broader Conservative strategy aimed at revitalizing London’s global competitiveness as a listing location and creating a more business-friendly, low-regulation environment.
In addition to the ESG rollback, Griffith said a future Tory government would also abolish stamp duty on home purchases, reverse Labor’s inheritance tax changes for family businesses and review regulations that have contributed to so-called “de-banking” – where business or personal accounts are closed due to reputational or ESG-related concerns.
“Our proposals will defend the right to freedom of expression and ensure that companies have access to banking services without having to face the gauntlet of woke middle managers who seek to challenge subjective ESG rules,” he said.
While the Conservatives argue the plans would cut red tape and boost growth, critics warn that scrapping ESG requirements could damage Britain’s reputation among international investors and sustainability-focused funds.
Major institutional investors – including BlackRock, Aviva and Legal & General – have said ESG disclosure remains a “core part of modern corporate responsibility” and transparency about environmental and social risks is now considered standard across global markets.
But Griffith dismissed concerns that deregulation would allow companies to “dodge” climate commitments.
“I don’t think so,” he said. “Companies are still accountable to their shareholders, whatever they say. They will continue to act responsibly without the state micromanaging every report.”
The comments come amid growing concerns in the city about London’s ability to attract large IPOs following high-profile defections such as Arm Holdings’ U.S. IPO last year.
As business investment lags and the UK’s regulatory environment is seen as increasingly complex, the Conservatives are seeking to position themselves as the party of deregulation and growth, contrasting Labor’s focus on climate responsibility and corporate transparency.
Whether the proposed ESG withdrawal would significantly increase stock market listings remains uncertain. Analysts warn that investor sentiment, market liquidity and geopolitical stability continue to have a far greater impact than disclosure rules alone.
