Government Publishes Green Finance Strategy2 July 2019
The Government has published its long awaited ‘green finance strategy’ which aims to put the City of London at the heart of efforts to cut greenhouse gas emissions to net zero. The development of the strategy follows last year’s Green Finance Taskforce report and sets out a number of measures intended to help finance green projects and position London as a global hub for climate finance.
The strategy includes the potential for mandatory disclosure of climate risks for large companies and investment funds and the launch of the new Green Finance Institute which aims to foster greater co-operation in sustainable finance.
The Government has also established a £5 million Green Home Finance Fund to help pilot finance including green mortgages to incentivise energy efficiency retrofit. A new Green Finance Education Charter is also being launched to improve the knowledge and understanding of green finance and the Government will also work with financial regulators to clarify how they should treat climate risk.
At Ecology we’re pleased to see that the role of finance to support the transition to a low-carbon economy is being recognised. We’re already seeing the Bank of England starting to incorporate climate risk into their thinking, helping to embed climate change into the regulatory landscape. The launch of the new Green Finance Institute to provide a hub for sustainable finance could be a positive move, especially if its work reaches out beyond the City of London to harness the diversity of the UK’s financial ecosystem, as is the commitment to improve the understanding of green finance.
As an organisation that has been providing green mortgages for over 30 years, we’ve proved that incentivising energy efficiency through mortgage pricing works by basing our mortgage rates on a property’s climate impact, leading to real savings in carbon emissions, so we welcome this new focus on green finance – at long last.
We’re looking forward to seeing more details on the Green Home Finance Innovation Fund which will need to deliver the creation of long-term sustainable financial solutions to help retrofit the UK’s aging housing stock.
However, while these are positive steps, there isn’t much evidence of ‘turbo-charging’ the UK’s green finance sector, as Ministers have suggested. We also think the Government has missed opportunities such as changing the stamp duty regime to incentivise energy efficiency. The pace of change needs to be accelerated and we need to urgently move beyond the age of pilots and reports to tangible actions at scale at soon as possible if we are to avoid the catastrophic human and ecological impacts of the climate crisis.