- Today, the government published its update to the Green Finance Strategy, alongside a suite of ‘Powering Up Britain’ strategies. The strategy sets out UK plans to create the regulatory and investment environment needed to deliver Sunak’s world-leading UK Net Zero-Aligned Financial Centre.
- Today’s Green Finance Strategy goes far beyond Government’s 2019 attempt, with further ambition on transition plan coverage and adoption internationally, recommitting to the delayed UK Green Taxonomy and a clear focus on the global role for UK green finance.
- The building blocks of a Net Zero Investment Plan are there, including new Investment Roadmaps and work to track green financial flows. It remains to be seen whether this will meet growing investor calls for a Plan to secure business confidence and compete with the US and EU on green growth.
Story
Today, the government released its update to the Green Finance Strategy. This includes commitments to deliver on the UK’s green finance promises including a UK Green Taxonomy. Mobilising the investment needed for net zero is one of the biggest challenges, and opportunities, for the UK. Without finance, the transition cannot happen – today’s Green Finance Strategy makes that clear.
Progress continues to be made on transition plans. The government will consult on making transition plans mandatory for all large companies, including private companies, on a comply or explain basis. This would create consistency with listed companies that are required to disclose transition plans by the Financial Conduct Authority. The Government is also launching a Transition Finance Market Review.
However, the investment roadmaps and tracking announcements do not yet amount to a UK Net Zero Investment Plan. The UK’s largest financial institutions and corporations have repeatedly called on Government to produce a regularly updated, whole-of-economy Net Zero Investment Plan.
A clear focus on nature and adaptation, and the international role of the Net Zero Aligned Financial Centre, will assuage many. But we need to see continued efforts to scale up global investment and deliver green global prosperity.
Focus now turns to delivering these promises, and to filling gaps left by the Green Finance Strategy, including clear net zero mandates for UK regulators. In a day of energy efficiency disappointments, the Green Finance Strategy update has made a good start. Still, significant sectoral progress is needed before the UK pips the US and EU to the post on global leadership.
Quotes
Heather McKay, Senior Policy Advisor, UK Sustainable Finance, said on the Green Finance Strategy:
“Today’s Green Finance Strategy is a marked improvement on the UK’s strategy in 2019 – with a welcome focus on mobilising investment across the country. However, we’re also nearly four years on, four Prime Ministers later and four years closer to climate catastrophe. The UK must move from consulting on promises to delivering results. 2023 will be a critical year for the UK to put its money where its mouth is on mobilising global green investment.”
Ed Matthew, Campaigns Director for E3G said on the need for a UK Net Zero Investment Plan:
“The commitment to set out sectoral investment roadmaps is a step forward, but this is not the full UK wide Net Zero Investment Plan, or commitment to independent financial flow tracking, that has been called for by leaders across the UK investment industry. If the Government wants to compete internationally on net zero investment, it needs to be bolder.”
Kate Levick, Associate Director for Sustainable Finance at E3G said on Transition Plans:
“Creating new regulatory norms for private sector transition planning is an urgent task if we are to unlock investment at scale for the Net Zero Transition. Today’s announced consultation on extending transition plan requirements to large private companies is welcome progress. This will help companies embed climate transition in business planning, and will also help investors to confidently allocate capital.”
Sima Kammourieh, Senior Policy Advisor at E3G said on Global Green Standards:
“Fragmentation of green and sustainability standards is a big global risk for all stakeholders. Above all, lacking a globally harmonised baseline on disclosure standards exposes consumers to significant greenwashing risks. The commitment made today by the UK government to pursue international engagement on, and support of, disclosure standards’ interoperability is absolutely essential to support the leaders, and stop the scoundrels.
The stability of the global financial system is once again in question today. At this critical juncture, the Bank of England’s commitment to work with international standard-setters on the role of transition planning in prudential risk management is excellent news.”
Franklin Steves, Senior Policy Advisor at E3G said:
“The UK is taking a leading role in driving forward the reform of the international financial architecture to mobilise the quantity and quality of finance needed to support the global net zero transition.
Government’s support for the Bridgetown Initiative and associated reforms of the multilateral development banks and the IMF can be catalytic in this regard, including capacity-building in emerging markets and adding to the ICF’s firepower. Without leaders, global net zero will falter – which is why it is so critical for the UK to turn this narrative into concrete action.”
Eduardo Lopez, Researcher at E3G said:
“Government has recognised the critical role of targeted public investment, and how to maximise the firepower of its public finance institutions by clearly setting out their roles and responsibilities for the transition. Today’s Green Finance Strategy takes important steps towards taking full advantage of the UK’s powerful public finance institutions to deliver billions in investments at home and abroad for net zero and nature protection.”
Available for comment
Heather McKay, Senior Policy Advisor, UK Sustainable Finance – Green Finance Strategy, Net Zero Investment Plan
Heather.mckay@e3g.org +44 (0) 770 727 5359
Ed Matthew, Campaigns Director, E3G – UK politics and overall policy announcements
Ed.Matthew@e3g.org +44 (0) 7827 157 906
Kate Levick, Associate Director, Sustainable Finance, E3G – Transition plans, UK Green Taxonomy
Kate.levick@e3g.org +44 (0) 207 593 2025
Sima Kammourieh, Senior Policy Advisor, Sustainable Finance
Sima.kammourieh@e3g.org +49 15117604965
Franklin Steves, Senior Policy Advisor, Sustainable Finance
Franklin.steves@e3g.org +44 7484 815 434
Eduardo Lopez, Researcher, Sustainable Finance
Eduardo.Lopez@e3g.org, +44 (0) 7901085214
Juliet Phillips, Senior Policy Advisor, UK Place Based Transitions, Green Homes, energy efficiency
Juliet.Phillips@e3g.org +44 (0) 7548 097061
Jonny Peters, Senior Policy Advisor, E3G – trade, CBAM
Jonny.peters@e3g.org +44 (0)7954201039
Notes to Editors
- E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
- For further enquiries email press@e3g.org or phone +44 (0)7783 787 863
