London launches Green Finance Initiative as capitals jockey for sustainable finance prominence

London is making a big play to become the world’s major hub for environmental investing – especially in green bonds – with today’s launch of the Green Finance Initiative (GFI), a collaboration between the UK Treasury, The Department of Energy & Climate Change and the City of London Corporation, the entity that lobbies for London as a finance centre. The initiative was symbolically launched at the opening bell of the London Stock Exchange today (January 14).
The move comes as a number of major financial capitals vie to become the biggest green financial centres on the back of what was widely regarded as a successful COP21 climate conference in Paris, France. Paris is itself jockeying for pole position as a sustainable finance hub after bringing in a raft of green initiatives post COP.
Speaking at the launch, Achim Steiner, Executive Director of the United Nations Environment Programme (UNEP), said there was a new race to the top amongst global financial capitals to be at the forefront of sustainable capital. Steiner said the UK report, accompanying the GFI, which was published by the UNEP Inquiry into the Design of a Sustainable Financial System, was an example of this. Link to report
London’s Green Finance Initiative is being headed up by Sir Roger Gifford, the former Lord Mayor of London, and UK head of Skandinaviska Enskilda Banken (SEB).
Harriet Baldwin, Economic Secretary to the Treasury, also a former investment banker as Head of Currency Management at JP Morgan Chase, said the UK government would “pull out all of the stops” to make London a green finance hub, looking particularly at green loans, insurance and capital markets. The GFI has created a UK Green Bond Market Development Committee to consolidate market innovation and encourage growth.Baldwin pointed to the listing on October last year on the London Stock Exchange of a $1bn dual currency green bond by the Agricultural Bank of China, one of the country’s “big four” banks, and China’s first green bond issue, which, she noted was 8 times oversubscribed: Link to RI story
She said the UK had also partnered with China on a G20 Green Finance Study Group. China chairs the G20 this year. Ma Jun, Chief Economist at the People’s Bank of China said the joint group was working hard to come up with recommendations on green finance to make to the China-hosted G20 summit later this year. Jun said Chinese banks were chasing to be among the next batch of green bond issuers and that the Chinese government was working on green disclosure requirements for capital markets. He said: “The Agricultural Bank of China green bond issuance in London is being seen as something of a showcase in China.”
Gifford said the green push by London was about “creating a platform for investors to back new technology and infrastructure” and to do necessary work around environmental transparency and accreditation standards.
Areas for exploration on green bonds, he said, included credit enhancement and off balance sheet support.