New measures to accelerate the growth of the green finance sector in the UK have been announced by the government, in a bid to source billions of pounds worth of investment needed to develop the market.
Green finance includes private sector investments in technologies, infrastructure and innovative start-ups that can create jobs and allow businesses to expand, boosting economic growth while reducing greenhouse gas emissions.
The UK government has established a taskforce of senior financial experts to accelerate growth of the sector as part of the UK’s shift to a low-carbon economy.
The Green Finance Taskforce, chaired by Sir Roger Gifford, former Lord Mayor of London, will be given six months to deliver ambitious proposals to accelerate investment in the transition, creating high-value jobs and opportunities for UK businesses. Members include executives from Aviva, Barclays, HSBC, Legal & General and the Bank of England, as well as academics and sustainability experts.
It will examine a range of interventions, from making infrastructure investment more sustainable to scaling-up green mortgages.
The government is also working with the Green Finance Initiative and the British Standards Institute to develop a new set of voluntary green and sustainable finance management standards, working closely with industry.
The British Standards Institute will have completed the necessary scoping exercises and have the first standard in production by the first half of 2018.
The government says that between 1990 and 2016, UK GDP has grown by 67%, while carbon emissions have fallen by 42%, which proves it is possible to reduce emissions and grow the economy, it argues.
Globally, an estimated $13.5 trillion of investment is needed between 2015 and 2030 in the energy sector alone for countries to meet their environmental commitments set out in the Paris Agreement.
Claire Perry, climate change and industry minister, said: “A strong economy and efforts to tackle climate change can, and should, go hand in hand. Now is the time to build on our strengths and cement our position as a global hub for investment in clean growth.
“The transition to a low carbon economy is a multi-billion pound investment opportunity and a key part of this government’s industrial strategy. Developing standards to promote responsible investment in sustainable projects and establishing the Green Finance Taskforce will help ensure businesses across the UK take full advantage of it.
“Britain’s financial sector is already a world-leader in green finance. Enabling this sector to develop further will not only assist the transition to a low carbon economy but also ensure London remains the world’s leading global financial centre.”
The government has also officially endorsed recommendations published by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures and encourages all listed companies to implement this new, voluntary framework to align climate-related risk management and financial governance.
Maria Connolly, partner and leader of energy and renewables team at solicitors TLT, said: “The current impetus to drive the UK towards a carbon neutral future can only be achieved with the backing of the financial sector, to fund projects and make this a reality.
“However, as with any financing, it is important that this is done within adequate governance frameworks and it is encouraging to see so many large funders involved in the Britain green finance taskforce. Not only will this encourage additional investment into the sector, but it will ensure that this investment is managed under stringent protocols.
“While one of the challenges facing the UK taskforce will be how to continue to make the British clean tech market attractive to investors as it continues to move away from the traditional renewables funding we have seen in the past, this is still a positive move for the UK and one that will hopefully see continued green finance investment in the UK market.”
