The Treasury said it wants financial advisers to “take sustainability matters into account” when giving investment advice.

It added that it wants advisers to “understand investors’ sustainability preferences to ensure suitability of advice” in a policy paper released last night.

The 'Greening Finance' policy paper did not set out any detail on the potential sustainability rules but added that its proposals would be subject to consultation and cost benefit analysis.

The Treasury paper also looked at ESG data and ratings providers. It said they are considering brining these firms into the scope of FCA authorisation and regulation next year due to the current disparity and subjectivity in the current ratings investors receive.

The Treasury added that it was important that providers deliver ratings "transparently and that they have strong governance and management of conflicts of interests".

The Treasury and the regulator did not outline a timescale for the consultation or implementation but noted that asset managers and investment product providers have requirements coming into implementation by 2022.

The Chancellor also used the paper to publish a roadmap setting out details on new Sustainability Disclosure Requirements for business.

The requirements will mean businesses must start disclosing their environmental impact.

The new requirements will also apply to pension schemes, investment products and asset managers with the Treasury claiming that the UK is “leading international efforts to bring about global and systemic change in the financial system” to support environmental efforts.

The Government is looking to deliver a UK Green Taxonomy to create clarity and consistency for investors around ESG. Providers of investment funds and products will be required to disclose to advisers and investors how their products are “Taxonomy-aligned”.

Commenting as part of the paper Nikhil Rathi, chief executive at the FCA, said: "It is essential that there is high-quality, reliable, and internationally comparable information on material environmental, social and governance factors right along the value chain - from corporates, to financial services firms, and onward to clients and consumers. Better information will not only improve decision-making, but also help to build trust and combat potential ‘greenwashing'.”

He added that the FCA is currently working on the “sustainable labelling system” for investment products.

The Treasury policy paper can be read online at https://www.gov.uk/government/publications/greening-finance-a-roadmap-to-sustainable-investing