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New measures to drive investment in clean growth and greater climate change reporting – By Melanie Kendall-Reid, Compliance Director
The UK government has announced new measures to accelerate investment in clean growth with a Green Finance Taskforce. The transition to a low carbon economy needs a multi-billion pound investment and is a key element of the government’s industrial strategy. It asserts that a strong economy and consistent efforts to tackle climate change must go hand in hand if the UK is to become a global hub for investment in clean growth and, in order to succeed, it needs to develop standards to promote investment in sustainable projects. The government sees the establishment of a Green Finance Taskforce as key to ensuring businesses across the UK are invested in such a plan.
Britain’s financial sector is already a world-leader in green finance. Enabling the sector to develop further will assist the transition to a low carbon economy. It is recognised that the public and private partnerships will need to work to generate success.
The taskforce will bring together a top team of financial experts, including leading figures from Aviva, Barclays, HSBC, Legal & General and the Bank of England, as well as academics and sustainability experts. The taskforce, chaired by Sir Roger Gifford, former Lord Mayor of London, will be given six months to deliver proposals to accelerate investment in the transition to a low carbon economy, creating high-value jobs and opportunities for UK businesses. It will examine a range of interventions, from making infrastructure investment more sustainable to scaling-up green mortgages.
Alongside the taskforce, the Government has announced it is working with the Green Finance Initiative and the British Standards Institute to develop a new set of voluntary green and sustainable finance management standards. The British Standards Institute will have completed the necessary standards scoping exercises and have the first standard in production by the first half of 2018.
The Government has also officially endorsed recommendations published by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures and encourages all listed companies to implement this new, voluntary framework to align climate-related risk management and financial governance. These recommendations represent a key milestone in the global low carbon transition, and have been backed by over 100 businesses worldwide with a market capitalisation of more than $3 trillion.
Between 1990 and 2016, UK GDP has grown by 67%, while carbon emissions have fallen by 42%, proving it is possible to reduce emissions and grow the economy. Green finance includes private sector investments in technologies, infrastructure and innovative start-ups that can create jobs and allow businesses to expand, boosting economic growth while reducing greenhouse gas emissions. Although the green finance agenda has gained global momentum in recent years, it is evident that the market must improve if it is to meet climate change commitments. It is estimated that $13.5 trillion of investment is needed by 2030, in the energy sector, if all countries are to meet their COP21 targets. The UK government knows that much of this investment will need to come from the private sector if it is to provide a meaningful national economic improvement.