To enable the UK economy to compete in the 21st century the UK Government has adopted five important domestic and international policy obligations, all of which depend on the expansion of green finance for successful delivery. Domestically, the 2008 Climate Change Act includes a legally-binding target to reduce UK carbon emissions by 80% compared to 1990 levels by 20505. Meeting this target is dependent on the Industrial Strategy, a key driver of future economic growth for the UK, as well as Clean Growth Strategy and 25-Year Environment Plan which identify further opportunities for investment.
At a global level the UK has signed up to the 2016 Paris Agreement on Climate Change: Article 2 requires the alignment of financial flows with a 1.5/2°C trajectory and implies a fundamental reorganisation of both the financial system and the real economy it serves. It has also signed up to the 2015 Sustainable Development Goals – establishing specific goals to be achieved in the next 15 years to end poverty, protect the planet and ensure prosperity for all – achievement of which requires a significant rethink of the UK’s current economic development model.
Access to reliable flows of low cost capital is essential if the Government’s policy obligations are to be met. The transition to a green economy is a global challenge estimated to be worth tens of trillions of dollars over the coming decades and presents significant economic opportunities. The UK, and the City of London specifically, is already a hub for green finance – but there is healthy competition posed by other global centres to become leading providers of green financial services. While this is desirable, the UK has the potential to establish itself as a global leader on this agenda.
E3G has been a key voice in the UK green finance debate. In 2016 E3G became an inaugural member of the Green Finance Initiative (a joint initiative of the UK Government and the City of London). In 2017 E3G convened the Green Finance Initiative members to set out a collective view of opportunities to expand green finance in the UK. This culminated in the publication of ‘15 Steps to Green Finance’, which sets out practical but ambitious steps the UK can take to expand green finance markets in the UK and abroad.
In parallel, the UK Government launched the Green Finance Taskforce in September 2017. The Taskforce draws senior leaders from the City of London to develop a set of policy recommendations to help deliver the investment needed to meet the UK’s Industrial Strategy and Clean Growth Strategy; further consolidate the UK’s leadership in financing international clean investment; and maximise the opportunities to be had for UK businesses in this rapidly growing area.
E3G is honoured to have been appointed to provide Secretariat support to the initiative. The Taskforce’s report to Government will be published at the end of March 2018.
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