The UK government has published its long-awaited green finance strategy, under which companies are expected to reveal no later than 2022 how climate change could impact on their finances.
City minister John Glen warned that ministers have not ruled out “compelling” publicly-listed companies and asset owners to release climate risk and impact data if they failed to meet the target.
The Treasury also wants the UK’s financial services sector to be at the forefront of policies to mitigate the effects of global warming.
The strategy includes plans to increase the UK’s investment in sustainable projects and infrastructure. A £5 million ‘green home finance fund’ has also been established to help pilot green mortgages, which will encourage the retrofitting of homes to make them more energy efficient.
“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,” said Glen. The new plans will “ensure the environment is at the centre of all financial decision-making.
“The City 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 pre-eminent international centre for green finance,” he added.
Zero by 2050
One of outgoing UK prime minister Theresa May’s final actions before leaving office has been to announce that the UK will reduce its net greenhouse gas emissions to zero by 2050, making it the first G7 member country to set such a target into law.
The strategy includes investment and funding increases into green projects, infrastructures and homes and is built on findings from the Task Force on Climate-related Financial Disclosures (TCFD), led by former New York mayor Michael Bloomberg and Bank of England (BoE) governor Mark Carney.
More than 780 organisations have already pledged support for the TCFD, including the world’s largest banks, asset managers and pension funds, responsible for assets of US$118 trillion, highlighting the appetite for green finance.
The UK minister of state for energy and clean growth, Chris Skidmore, said: “As the first major economy to legislate to reach net emissions by 2050, green finance can play a crucial role in our mission to protect the planet while growing the economy.
“Through today’s plans and by putting clean growth at the heart of our modern industrial strategy we’ll continue to work with our leading financial services sector to drive even more ambitious action, showing the rest of the world that responsible business can be a win-win for the economy and the environment.”
A further initiative will be the launch of a Green Finance Education Charter, to place green finance and climate change understanding as part of future qualifications and certificates for financial practitioners.
The UK government is also allocating finding of £5.8 billion for international climate finance to encourage other nations to act on climate collaboratively.
Stephanie Pfeifer, chief executive of European lobby group Institutional Investors Group on Climate Change (IIGCC) commented: “The financial sector has a crucial role to play in addressing climate change. The Green Finance Strategy will support the City in capitalising on the opportunity to green the global economy. This brings with it financial innovation and wealth creation, just as it is essential in safeguarding the future of our planet.
“The BoE sees US$20 trillion of assets on the line globally without greater action being taken. Consistent and transparent reporting is key to ensuring the information is in place to act on exposure to a changing climate and avoid being caught on the wrong side of the transition to a cleaner economy.”
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