The UK government has been urged to issue a sovereign green bond and incentivise green loans and mortgages in a wide-ranging report from industry experts published today. The Green Finance Taskforce, chaired by Sir Roger Gifford, Head of SEB UK, was set up by the UK Government last year to make recommendations within a six month window on accelerating the growth of green finance and the low-carbon economy. In a 95-page report published today, it says the UK Government and the City of London should co-create a ‘Green Finance Institute’ to clearly communicate, map and promote the country’s green finance activity. It also calls for the creation of a ‘Centre for Climate Analytics’ to improve climate risk management with better data and a £100m ‘Local Development Finance fund’ awarding grants for clean infrastructure projects. The report recommends that government urge companies to adopt the Task Force on Climate-related Financial Disclosures framework and clarify that disclosing material environmental risks is already mandatory under existing laws. It also calls for clarification of investor roles and responsibility, including a requirement that Statement of Investment Principles have ESG statements and investment consultants ask clients about their sustainability preferences.
On a sovereign green bond, the report says the UK should issue debt to the order of the French sovereign green bond programme, which has raised €9.7bn. It should adopt the Green Bond Principles, have a government steering committee for the sovereign debt and money raised should finance new green investment that would not otherwise have happened.
Speaking at the report launch, Nikil Rathi, CEO of the London Stock Exchange, said London had been successful at attracting international green bond listings, with the latest being a London listing in two weeks time for Fiji’s US$50m sovereign green bond launched last year. However, he noted that the Sterling green bond market had not reached any scale yet: “We hope that government taking a leadership role here will act as a catalyst for UK companies and municipalities to issue.”The report also makes recommendations on boosting green lending products, clean tech and green infrastructure, and fostering local action.
In a forward to the report, Claire Perry, Minister of State for Energy and Clean Growth and John Glen, Economic Secretary to the Treasury, describe the transition to a low carbon economy as a major opportunity for the UK. At the report launch, Perry said the recommendations would accelerate green finance to meet the commitments of the UK Clean Growth Strategy, its proposals for decarbonising all sectors of the UK economy through the 2020s in order to meet its binding carbon budgets. She said there were already 430,000 people working in the green economy in the UK, in a sector she said was growing at an annual rate of 5%.
Perry also announced the creation of “Green Great Britain Week” in October this year.
Members of the Green Finance Taskforce, included LSE’s Rathi, Fiona Reynolds, Managing Director, Principles for Responsible Investment and Edward Northam, head of Green Investment Group, Europe (formerly the Green Investment Bank). The Green Finance Taskforce has brought together the UK Treasury, BEIS and other government arms including the Department for Environment, Food and Rural Affairs (DEFRA) in what many perceive to be a good platform for policy collaboration. Sir Roger Gifford said an implementation committee will be created to track progress on the Taskforce recommendations and champion the agenda. He said the Green Finance Taskforce would take on responsibility with BEIS and the Treasury for driving the initiative forward. He said it hadn’t been decided if the Taskforce would maintain its voluntary working group, but noted that it would probably need its own permanent staff that “could be developed into something larger in due course.”
With additional reporting by Hugh Wheelan