UK launches ambitious net zero financial centre

12 November, 2021

The UK government has set a plan to become a leading global "net zero-aligned financial centre", with aims to establish rules and financing for ambitious climate-related projects.

Chancellor Rishi Sunak announced a series of measures during the COP26 conference in Glasgow, including the mandatory publication of net zero transition plans for asset managers, asset owners and listed companies.

The government will publish a "transition pathway for the financial sector" in the new year, based on its roadmap that it launched last year.

To combat greenwashing, a science-based "gold standard" for transition plans will be drawn up by a newly established Transition Plan Taskforce, which includes industry and academic leaders, regulators, and civil society groups.

Meanwhile, commitments from financial service firms will to create a pool of cash that aims to fund the net zero transition, including the move away from coal, the shift to electric cars, and the planting of more trees.

Sunak also urged developed countries to boost their support to developing countries.

The UK will aim to address barriers to green finance faced by developing countries with a series of initiatives funded from its International Climate Finance (ICF) commitment. This includes £100 million to respond to recommendations from the UK co-chaired Taskforce on Access to Climate Finance.

In total, the UK will spend £575 million on a package of initiatives which injects finance into emerging markets and developing economies, including £66 million to expand the UK’s MOBILIST programme, which helps to develop new investment products which can be listed on public markets and attract different types of investors.

Alongside the ICF commitment, the chancellor also announced the launch of the Climate Investment Funds Capital Markets Mechanism (CCMM), which aims to boost investment into clean energy projects in developing countries.

The UK has also contributed £2.5 billion to Climate Investment Funds, with the return from the investment to be allocated to CCMM. The new fund will use its returns to issue green bonds worth billions of pounds in the City of London and could leverage an additional £30-70 billion from other sources for specific clean energy projects.

Plans to turn TCFD reporting into law for more than 1,300 publicly traded companies have also been announced.