On Monday, 9 November the UK released a suite of green finance reforms which send welcome signals of international collaboration while also raising questions about the UK’s level of ambition to finance the net-zero transition.
On Monday the Chancellor of the Exchequer announced that the UK will create a green taxonomy which will take the scientific metrics in the EU taxonomy as its basis, and that it will appoint a Green Technical Advisory Group to review these metrics to ensure they are right for the UK market.
This announcement comes more than a year after the UK pledged to at least match the ambition of EU sustainable finance policy and was accompanied by a commitment to join the European Commission’s International Platform on Sustainable Finance (IPSF) which already has 14 members representing 50% of global greenhouse gas emissions.
Sunak also announced the launch of a new TCFD Roadmap by financial regulators. This will require mandatory climate risk disclosure for all firms by 2025 rather than the 2022 date long called for by climate campaigners, although requirements will be in place for many firms by 2023.
The UK will also issue its first sovereign green bond, following in the footsteps of countries including France, the Netherlands, Germany, Chile, Indonesia, Lithuania and Belgium.
The UK separately announced the creation of an Office for Investment to support the landing of high value investment opportunities into the UK which align with key government priorities, such as reaching net zero. Many onlookers are hoping that the UK will go further in coming days and announce the creation of a National Investment Bank which has a mandate to mobilise public and private finance for a transition to a climate-safe UK economy.
Kate Levick, Sustainable Finance Program Leader of E3G said:
“It is encouraging to see the UK taking concrete steps on green finance to ensure that it remains among the top tier of countries internationally. As President of the G7 and COP26 in 2021 we fully expect to see the UK go even further next year. Key opportunities to show global leadership could include mandating net zero transition plans for financial firms or establishing a new national investment bank with a net zero mandate.”
Tom Burke, Co-founding Director and Chairman of E3G said:
“London financed the industrial revolution that brought us a dangerous climate. Today’s announcements put it in pole position to finance the green revolution for climate safety.”