Corporate TreasuryFinancial Supply ChainGreen Finance Strategy announced for the UK

Green Finance Strategy announced for the UK

The Green Finance Strategy will ensure financial risks and opportunities from climate change are integrated into mainstream financial decision making

The UK Government has announced its landmark Green Finance Strategy, setting out plans to increase investment in sustainable projects and infrastructure.

These plans will ensure London is at the heart of global efforts to funnel the world’s capital into climate-friendly activity.

Unveiled at the third Green Finance Summit in London, the Economic Secretary to the Treasury and City Minister John Glen argued that financial services will have a bigger role to play than any other sector in tackling climate change.

Economic Secretary to the Treasury and City Minister, John Glen, said: “The UK has a long history of leading the way in tackling climate change, but we need to do more to protect our planet for future generations. The City [of London] has a vital role to play in securing a greener future for us all. By investing more in sustainable projects it can not only protect our environment, but also help establish London as the preeminent international centre for green finance. Today’s Green Finance Strategy will support this ambition, with new initiatives to boost funding for green ventures and ensure the environment is at the centre of all financial decision-making.”

The Green Finance Strategy

The Green Finance Strategy recognises the role of the financial sector in delivering global and domestic climate and environmental objectives. It sets out the proposals for green finance at the heart of delivering the UK’s Clean Growth Strategy, 25 Year Environment Plan and Industrial Strategy.

The strategy will increase availability of finance to make the most of the economic opportunity and plan on how the proposals support the UK’s economic policy for strong, sustainable and balanced growth.

Other announcements to support the growth of green finance include:

  • Launching the Green Finance Education Charter, to make sure financial services-related qualifications and certificates include developing practitioners’ knowledge and understanding of green finance so they have the tools to take it up.
  • Playing a leading global role in Green Finance, encouraging other countries to do more through forums like the UN’s Climate Summit and ensuring the UK’s aid spending is aligned with the climate objectives of the Paris Agreement.

The Green Finance Institute, co-funded by the UK Government and the City of London Corporation, was also launched at the Summit. Rhian-Mari Thomas, former Head of Green Banking at Barclays, has been appointed as the institute’s first CEO.

Force for Good

A statement issued by the British High Commission in New Delhi said Britain welcomes Indian organisations looking to access green financing. Indian issuers have raised 1.5 billion pounds on the London Stock Exchange through green bonds over the past two-and-a-half years — including through Indian Renewable Energy Development Agency’s (IREDA) ground-breaking 216 million pounds green masala bond.

Both governments have also established the Green Growth Equity Fund which intends to raise capital from institutional investors for investment in green and renewable energy projects in India.

Harnessing green finance to raise capital for India’s infrastructure investment requirements will be a central theme at the landmark India Day on July 16 hosted by the British government and the City of London Corporation at Mansion House.

Economic Counsellor at the British High Commission New Delhi, Natalie Toms, said: “The Green Finance Strategy is another welcome addition to the long list of actions the UK is taking domestically and internationally – including in partnership with India – to tackle climate change. Both the UK and India are working together as a joint Force for Good on issues from renewable energy to climate resilience. I’m delighted that the new Green Finance Institute will help create even more opportunities for Indian organisations to raise green finance in London.”

According to the consensus reached by experts during a panel discussion at the 13th Asia Bond Markets Summit, the dearth of consolidated standards for issuance is a big hindrance for green bonds in the Asia Pacific region.

Mixed reception

The government’s announcement was welcomed by several investors and observers, but they also cautioned it was insufficient or missed a potential opportunity.

Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, said the new requirements were welcome first steps in beginning to fundamentally change corporate behaviour.

Ben Nelmes, Head of Public Policy at the UK Sustainable Investment and Finance Association, described the strategy as a good first step.

However, Mark Thomas, ESG specialist at asset management consultancy Alpha FMC, said the government’s strategy misses a potential opportunity to really challenge organisations on their carbon emissions and to help them improve.

Ian Simm, Founder and Chief Executive of Environmental Solutions Specialist Impax Asset Management, warned that The Green Finance Strategy could prove ineffective in delivering on the government’s goal of reaching net zero carbon emissions by 2050.

Last week, the European Union launched a voluntary EU Green Bond Standard and a set of low-carbon benchmarks.

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