A new report has advised the government to set out “clear and consistent policies and regulations” on decarbonising the broader economy as the most effective way to unlock and stimulate UK leadership in green finance.
The report from TheCityUK and PwC found that around 70% of the £110 trillion investment needed globally to reach net zero will need to be found in private financial markets.
Jon Williams, a partner at PwC Global Banking & Capital Markets ESG leader and PwC UK Sustainability Chair, said:
“There is a strong appetite in the UK to accelerate the reduction in carbon emissions as we move towards net zero, but we are not moving quickly enough.
“The required effort must come from everyone – from policymakers to business leaders and consumers themselves.”
The report, Enabling the net zero transition: the role of financial and related professional services, looks at the risk factors across each sector that are stopping more significant investment and capital from allocation to greener investment.
There is a 10-point plan in the report designed to help government, regulators and broader industry take advantage of the opportunities that come from expanding UK-based green finance.
Risk factors include technology, business models and policy. The report also explains how to address or reduce these risks to unlock the necessary investment in greener finance.
Miles Celic, chief executive officer at TheCityUK, said:
“Delivering the transition to net zero will take more than good intentions. It will require the government, regulators, and industry to work in close partnership.
“We all have our own role to play, and action by one cannot compensate for inaction by another. Financial regulations cannot substitute for government climate policies, and consumer spending choices cannot substitute for public and private investment.
“We are calling on the government to take forward a 10 point action plan to help unlock the vital investment needed to reach our net zero ambitions. We also need a clear and sustained cross-party commitment to net zero, with well-signalled policies to drive forward proactive decarbonisation across the whole economy.”
The 10-point action plan calls on the UK government to:
- Deliver effective, quantified, detailed and long-term national net zero policies, incentives, and regulations for the real economy industries.
- Develop and publish interim national net-zero capital raising plans, to set out the UK’s investment needs to 2030/2035 and how it intends to raise the capital required.
- Address and share investment risks through the scaling of blended finance and other incentives.
- Facilitate deeper collaboration between policymakers, regulators, corporates and SMEs to scale up investment – and address greenwashing and support the Just Transition.
- Continue to engage with other jurisdictions to drive global convergence and interoperability on sustainability disclosure and reporting standards – so that the UK as an international finance centre can build on its strengths to deliver green and sustainable investments in the UK and beyond.
- Improve disclosures by extending the scope of Taskforce on Climate-related Financial Disclosures and net zero transition plans to include smaller and privately owned businesses in a proportionate way — and ensuring that the UK’s green taxonomy and Sustainability Disclosure Requirements distinguishes between green and transitioning activities.
- Seek to increase the level of disclosures for direct and indirect GHG emissions, as and when data availability and accuracy improves.
- Commit to producing an initial assessment of how markets are using climate-related data within its forthcoming update to its Green Finance Strategy.
- Further develop the role of carbon pricing through carbon and environmental credit markets – by widening carbon cap and trade schemes appropriately, and working on an international carbon price floor.
- Establish a regulatory framework for carbon and environmental credit markets – to achieve transparency, environmental integrity, and standardisation of methodologies for carbon and environmental credit certification.
