The UK is competing in a global race to lead on net zero and secure the economic benefits from leadership. The upcoming Green Finance Strategy will set out the government’s latest plans for creating a “Net Zero-Aligned Financial Centre”, a commitment made by Rishi Sunak at COP26 in 2021. In this report, E3G and Re:Pattern set out proposals for goals, themes, objectives and indicators to guide the Net Zero-Aligned Financial Centre to success.
Skidmore’s Net Zero Review called net zero the “economic opportunity of the century”. Building a Net Zero-Aligned Financial Centre would harness the potential of the UK’s financial sector to drive the net zero transition. The sector can scale up investment in green technologies, manage climate risks across the economy and mainstream new norms such as transition plans. Creating an effective Net Zero-Aligned Financial Centre can therefore amplify government action to accelerate net zero investment in the UK. It can also open up new investment opportunities internationally and increase the UK’s international competitiveness.
However, the financial sector will only drive change if broader government policy to support the UK’s transition is consistent, coherent, and credible. Supervision and regulation that fully addresses and supports the sector’s role in the transition will be critical. Institutions also need easy access to consistent and decision-relevant data.
To capture the benefits and secure the UK’s leadership, the UK government must therefore set clear objectives for the Net Zero-Aligned Financial Centre. Indicators should be selected which monitor progress against both financial sector action, and the enabling conditions. This report sets out proposals for the themes, objectives, and indicators that might be used, as part of a regular monitoring process, to ensure the UK remains on track. It builds on E3G’s earlier work on the Net Zero-Aligned Financial Centre, and draws on input from a range of financial services professionals and experts.
The UK’s financial sector is one of its most important assets. The government has an opportunity to set the UK up for success through the design and monitoring framework of the Net Zero-Aligned Financial Centre. The high-level figure below sets out our proposed goals and core themes, which the government could elaborate on in the forthcoming Green Finance Strategy, expected later this month.
Read the report here.