For environmentalists, global politics can feel like a lonely place. Recent headlines include Bolsonaro’s “huge rise in Amazon destruction”, the re-election of Australia’s “coal-clutching premier” and Trump’s disdain for climate action; “we have the cleanest air we’ve ever had”.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>But last week, environmentalists found an unlikely ally: the UK financial sector, which published its first Green Finance Strategy on 2 July.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>To help implement the strategy, the UK launched a Green Finance Institute, the City of London hosted a Green Finance Summit and UK financial regulators launched a joint statement on climate change. This is the first real example of the UK’s financial regulators seriously addressing climate change. And all this follows the UK’s world-leading commitment to net-zero carbon emissions by 2050.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>If that’s not enough, the London Stock Exchange recategorised oil and gas firms as “non-renewables”. Action to tackle climate change has become an unlikely legacy of the May government.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>The UK’s Green Finance Strategy can be understood in two ways: greening finance and financing green. The distinction sounds like a semantic move, but the two categories are different.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>Greening finance will ensure the current and future financial risks and opportunities from climate change become part of financial decision-making. Financing green is the acceleration of finance to support the delivery of the UK’s carbon targets and clean growth.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>A core part of “greening finance” is an expectation for companies and investors to report against the Task Force on Climate-related Financial Disclosures (TCFD) framework<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″> by 2022 at the latest. At the organisation I work for, the UN Principles for Responsible Investment<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″> (PRI), we’re finding that momentum on TCFD is growing. Over 500 investors representing $42trn in assets, including over 80 in the UK, are reporting to us on TCFD-based climate risk indicators. Yet implementation remains partial, especially on the important-but-tricky-to-do recommendations from the TCFD on forward looking analysis. Through improved corporate reporting, education and guidance, the UK government can reduce information barriers.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>On “financing green”, the UK government needs to go further still. A major gap is financing green infrastructure. The UK could also follow the French in issuing a sovereign green bond. Paris and Frankfurt present real competition in winning green capital.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>But most importantly, the test of the new Conservative government will be whether policy change is introduced to meet the strategy’s objectives.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>In 2006, former UN secretary-general, <span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>Kofi Annan launched the PRI at the New York Stock Exchange. Thirteen years on, it still stands ready to help, with <span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>most major investors having signed the PRI, requiring them to report annually on their responsible investment activities.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>We have access to the latest climate finance thinking across the investment community, and we’re headquartered on the City’s doorstep. Last week, our director of climate change gave evidence at a UK treasury select committee hearing on green finance.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>As an international organisation, we’re distinctly aware that substantial challenges remain. But unlike the US, Brazil and Australia, climate change policy in the UK largely transcends party politics.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>Earlier this year, atmospheric carbon levels passed 415ppm; the highest figure humankind has even known. With the Green Finance Strategy, the UK financial sector has an opportunity to lead the world on the transition to a low carbon economy. The Green Finance Strategy is just a start – but it’s a start to be proud of.
<p style="font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2;
text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
text-decoration-color: initial;word-spacing:0px”>
<span style="font-size:10.0pt;
font-family:"Arial","sans-serif";color:#333333″>Will Martindale is Director of Policy and Research at the UN Principles for Responsible Investment. He tweets @WillJMartindale
Content from our partners
Related
