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16 July 2019

Could the UK’s financial sector become an unlikely ally for climate action?

New guidelines could impel the sector to start greening finance and financing green infrastructure. 

By will Martindale

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”.

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.

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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.

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.

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.

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.

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) frameworkhe organisation I work for, the UN Principles for Responsible Investment text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
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secretary-general, stands ready to help, with  text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-style: initial;
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director of climate change gave evidence at a UK treasury select committee hearing on green finance.

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.

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.

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