Green

Finance
Strategy
Transforming Finance for a Greener Future
July 2019
 Contents

Ministerial Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 1: Greening Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 2: Financing Green . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chapter 3: Capturing the Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Annex A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Annex B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

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Ministerial Foreword

to seize the commercial potential arising from this

transition, which is why green finance is at the
heart of the Government’s approach, and a pillar
of both our Clean Growth Strategy and Industrial
Strategy. It will also help ensure our financial
system is robust and agile enough to respond to
the profound challenges that climate change and
the transition to a clean and resilient economy
bring with them.
Building on the important The
work of the Green
UK has a proud record in tackling clima
Rt Hon Greg Clark MP Rt Hon Philip
Finance Taskforce, this first Green Finance
Transforming our financial system for a gre
Secretary of State for Hammond MP
way. achieve this
Strategy sets out how we will
Business, Energy and Chancellor of the
ambition and accelerate theWegrowth of green
were the first country in the world to set
Industrial Strategy Exchequer through the Climate Change Act 2008. We h
finance, from greening the global financial system
through our 25 Year Environment Plan, we a
and catalysing the investment wecondition
in better need, to thandriving
we found it.
The UK has a proud record in tackling climate
innovation in financial products and building
But tackling climate changeskills
and environmen
change and protecting the environment.
across the financial sector.net zero emissions by 2050, we are respondi
Transforming our financial system for a greener
our objectives will require unprecedented le
future is important for us to continue to lead This Strategy is also a call technologies,
for collective action,
services and infrastructure. Gr
the way.   setting out how we will work with
capital we industry,
need.
regulators, academia and the newly launched
The challenges in creating a sustainable and
We were the first country in the world to set long-
Green Finance Institute to greater
deliverstill.theWith a leadingand
urgent financial services
term, legally binding emissions reduction targets, potential arising from this transition, which i
far reaching change that is needed for a greener,
through the Climate Change Act 2008.  We have approach, and a pillar of both our Clean Gro
more sustainable and prosperous
ensure ourfuture.
financial system is robust and agi
led the G20 in decarbonising our economy. 
climate change and the transition to a clean
And, through our 25 Year Environment Plan, There is no doubt about the scale of the
Building on the important work of the Green
we are delivering our commitment to leave the environmental challenge that we face. To tackle
out how we will achieve this ambition and ac
environment in better condition than we found it.  that challenge effectively and
globalsustainably
financial system and catalysing the inv
requires us to harness theproducts
delivery andcapacity
building skills
ofacross
the the financ
But tackling climate change and environmental
market economy – and in particular
This Strategy to mobilise
is also a call for collective actio
degradation is only just beginning. By legislating
regulators, academia
the enormous resources of our capital markets and the newly launche
for net zero emissions by 2050, we are reaching change that is needed for a greene
through Green Finance. This Strategy represents
responding to the latest science by raising our
our commitment to takingTherethe steps that
is no doubt willthe scale of the env
about
ambition. Meeting our objectives will require
ensure that the UK’s Green Finance sectorand
challenge effectively issustainably require
unprecedented levels of investment in green and economy – and in particular to mobilise the
turbo-charged to play a crucial role in protecting
low carbon technologies, services and Green Finance. This Strategy represents our
the future of our planet forthegenerations
UK’s Green Financeto come.
sector is turbo-charg
infrastructure. Green finance will be central to
providing the flows of capital we need. planet for generations to come.

The challenges in creating a sustainable

and resilient economy are great – but the
opportunities are greater still. With a leading
financial services sector, the UK is ideally placed Rt Hon Greg Clark MP Rt Hon Philip Hammond MP
Phillip Hammond MP

Chancellor of the Exchequer

1
 Green Finance Strategy

The UK’s Green Finance Strategy

• Aligning private sector financial flows with clean, environmentally sustainable
and resilient growth.
• Strengthening the competitiveness of the UK financial services sector.

GREENING FINANCING
FINANCE GREEN
Mainstreaming climate and Mobilising private
environmental factors as a finance for clean and
financial and strategic imperative resilient growth

• Establishing a shared understanding • Establishing robust, long-term policy frameworks

• Clarifying roles and responsibilities • Improving access to finance for green
• Fostering transparency and investment
embedding a long-term approach • Addressing market barriers and
• Building robust and consistent building capability
green financial market • Developing innovative
frameworks approaches and
new ways of
working

CAPTURING THE
OPPORTUNITY
Cementing UK leadership in
green finance

• Consolidating the UK’s position as a

global hub for green finance
• Positioning the UK at the forefront
of green financial innovation and
data and analytics
• Building skills and
capabilities
on green
finance

2 3
 Green Finance Strategy

Executive summary

Climate change and the degradation of the world’s

natural capital assets are defining issues of our
The global shift towards
time. The world is getting warmer, sea levels are cleaner, resilient growth
rising, pollution is costing lives and biodiversity As the international community begins to
is collapsing.  The recent Intergovernmental take the action that this challenge demands, a
Science and Policy Platform on Biodiversity and significant transformation is beginning in the
Ecosystems Services (IPBES) Global Assessment global economy towards cleaner, more resilient
and the Intergovernmental Panel on Climate economic growth. We expect that countries will
Change (IPCC) Special Report on 1.5°C are both increase their commitments and accelerate this
timely reminders of the urgency of action. transition at COP26 in 2020, which the UK has bid
The UK’s new target to reach net zero greenhouse to host in partnership with Italy1. The re-allocation
gas emissions by 2050 means we are the first of tens of trillions of dollars of capital towards
major economy in the world to set such a target green investment offers the potential to reshape
into law. We are also introducing a landmark cities, energy systems and land use around the
Environment Bill, which will place environmental world. The nature of this investment over the
ambition and accountability at the very heart coming decades will determine the future of our
of government and put our flagship 25 Year climate, the natural world and the resilience of
Environment Plan into law. our communities. It also presents a substantial
commercial opportunity for the UK financial
We need to shift to a world where we are at net
sector.
zero emissions, and deliver our commitment that
this will be the first generation in our history As recently noted by the International Energy
to leave the environment in a better condition Agency, the UK has led the way in the transition
than we found it. This means systemic changes to a low carbon economy2. Since 1990, we have
across all parts of our economy; and in particular grown our economy by two-thirds while reducing
delivering a global financial system that supports our carbon emissions by over 40%, the strongest
and enables these outcomes. This strategy is our performance of any G7 country. There are already
first step towards delivering that vision.  almost 400,000 jobs in low carbon businesses and

UK vs G7 GDP and Emissions

180 UK GDP + 72%

160
G7 GDP + 65%
140
120
100 G7 emissions - 5%
Index (1990=100)

(1990 - 2016)
80
60
UK emissions - 42%
40
20
1990 1995 2000 2005 2010 2015
Source: World Bank, UNFCCC, ONS, BEIS Greenhouse Gas Inventory.

4 5
 Green Finance Strategy

their supply chains across the country3 and clean

growth sits at the heart of the UK’s Industrial
ambitions, as well as further enhancing the
competitiveness of the UK’s real economy and
Strategy and Objectives
Strategy as one of four ‘Grand Challenges’. financial services sector. Leadership on green Our Strategy has two objectives, and three strategic pillars to achieve them:
finance will enable the UK to maximise the
The Government has a proud pedigree of climate
economic opportunities of the global and domestic
and environmental leadership, such as the UK
shifts to clean and resilient growth.
OBJECTIVES
Climate Change Act, Clean Growth Strategy,
25 Year Environment Plan and the National Progress is undoubtedly being made. 70% of To align private sector financial flows with clean, environmentally sustainable and resilient growth,
Adaptation Programme and now this Green banks in the UK now consider climate change as supported by Government action.
Finance Strategy. As we move towards a net a financial risk4, and green financial products are
zero economy, finance will play a crucial role in increasingly becoming more widespread in the To strengthen the competitiveness of the UK financial sector.
enabling changes to our homes, how we travel and market. But much more needs to be done. Only
our agriculture. The UK has the opportunity to 10% of banks in the UK are taking a long-term
lead the way in clean, climate resilient growth that strategic approach to managing the financial STRATEGY
protects our natural environment. risks from climate change5, and the total global
and domestic value of outstanding green bonds
Chapter 1 Chapter 2 Chapter 3
is only a fraction of the financing required. And
Transforming the Financial more needs to be done to ensure the physical
Greening Finance Financing Green Capturing the Opportunity
Ensuring UK financial services
System and transition risks from climate change are fully Ensuring current and future Accelerating finance to support
capture the domestic and
taken into account so as not to undermine the financial risks and opportunities the delivery of the UK’s carbon
As the financial risks and opportunities from international commercial
future resilience of individual investments and the from climate and environmental targets and clean growth,
the low carbon transition become apparent, a opportunities arising from the
wider economy. factors are integrated into resilience and environmental
second, equally important, transformation is ‘greening of finance’, such
mainstream financial decision ambitions, as well as
also underway: that of the financial system. This as climate related data and
making, and that markets for international objectives.
transformation moves beyond just funding green Delivering an ambitious green financial products are
analytics, and from ‘financing
projects to ensuring climate and environmental green’, such as new green
factors are fully integrated into mainstream
and credible Green Finance robust in nature.
financial products and services.
financial decision making across all sectors and Strategy .
asset classes.
Our Green Finance Strategy supports the UK’s
And here too, the UK has led the way. The Green economic policy for strong, sustainable and
Finance Taskforce report, published in March balanced growth, the delivery of our modern
2018, was a landmark in the development of UK Industrial Strategy and our domestic and
green finance. The Bank of England has played a international commitments on climate change, the
pivotal role, both domestically and internationally, environment and sustainable development. 
to ensure climate change is considered a
It is informed by the private sector and wider
mainstream and far-reaching financial risk, as This Strategy is an ambitious package, bringing There is increasing international recognition of
stakeholders, and is, in part, a response to the
well as one that requires action today. UK firms together work from across the Government, the need to integrate climate and environmental
recommendations of the Green Finance Taskforce,
have also played a leading role at home and regulators and the private sector. We will be co- factors into mainstream financial decision-making.
chaired by Sir Roger Gifford. The Taskforce is a
abroad, with banks, insurers, asset managers and ordinating closely with our international partners One of the most influential initiatives to emerge is
leading example of the cross-sector collaboration
pension funds in the vanguard of green financial to achieve our objectives. the Financial Stability Board’s private sector Task
that the strategy seeks to advance. To this end
innovation, supported by a rich ecosystem of civil Force on Climate-related Financial Disclosures
the Government has already taken action to
society, business, academia and technical experts. Greening Finance (TCFD), supported by Mark Carney and chaired
implement its recommendations ahead of the
The transition to a green financial system means by Michael Bloomberg. This has been endorsed
publication of this strategy, such as announcing
by institutions representing $118 trillion of assets
Cementing UK leadership the establishment of the Green Finance Institute fundamental changes to the way decisions are
made across the economy. To achieve the goals of globally6. An increasingly large proportion of the
(GFI). As the UK’s principal forum for collaboration
With our track record on clean growth and a the Paris Agreement and our wider environmental private sector is now beginning to implement
between the public and private sector with respect
world-leading financial sector, the UK is well- ambitions, all finance will need to incorporate the TCFD recommendations and in September
to green finance, the GFI will play an integral
placed to seize the economic benefits of green the financial risks and opportunities presented 2017, the UK became one of the first countries to
role in supporting delivery of our Green Finance
finance. As the Industrial Strategy demonstrates, by climate change and other environmental formally endorse them.
Strategy and driving the mainstreaming of green
this is a win-win for our climate and environmental finance in the UK and abroad. challenges.
6 7
 Green Finance Strategy

Alongside the private sector, central banks and chairing a new International Organisation As we move forward with this ambitious domestic Financing Green
supervisors are also taking action to address for Standardisation (ISO) Technical and international agenda, the Government will call
A strategy to green the financial system as a
the far-reaching financial risks associated with Committee on Sustainable Finance; upon the GFI to provide on-going representation,
whole needs to be combined with specific actions
climate change. World leaders also took notice in insight and guidance from the financial sector to
• Working with the FCA and Bank of England, to mobilise and accelerate flows of private finance
2016, and welcomed the work of the G20’s Green inform our strategy.
including through the Fair and Effective into key clean growth and environmental sectors
Finance Study Group7, co-chaired by the UK and
Markets Review, to consider steps that And while the focus of this Green Finance Strategy at home and abroad.
China.
can be taken to understand the potential is on private financial flows, we recognise that
The UK has leading, long-term and legal policy
Building on the UK’s existing leadership, the first or actual barriers to the growth and the financial risks and opportunities of climate
frameworks, most notably the UK’s Climate
chapter of this strategy sets out the actions we effectiveness of green finance markets; and change are relevant for the public sector as well
Change Act, which was the first of its kind, and
are taking to ensure climate and environmental as industry. That is why:
• Working with international partners to plans to place the 25 Year Environment Plan on
factors are recognised and acted upon as a matter
catalyse market-led action on enhancing • The Government will consider the financial a statutory footing. These help provide the long-
of strategic and financial imperative. Our strategy
nature-related financial disclosures. This risk exposure relating to climate change term certainty we know investors need and the
focuses on four elements:
will complement the recently announced and the low carbon transition as part of the foundation on which we are financing our clean
• Establishing a shared understanding; global review of the economics of 2020 Managing Fiscal Risks report; and growth ambitions.
• Clarifying roles and responsibilities; biodiversity by Professor Sir Partha
• CDC and UK Export Finance will make Since 2010, there has been more than £92 billion
Dasgupta. 
• Fostering transparency and embedding a climate-related financial disclosures invested in clean energy in the UK8. We have
long-term approach; and Our ambition for bringing about the systemic in their accounts in line with the TCFD also made specific interventions to accelerate
• Building robust and consistent green change required will not happen overnight, and recommendations as soon as practicable, green financing, for example, through the Green
financial market frameworks. our strategy for greening the UK’s financial following the close of the 2020/21 financial Investment Bank (GIB). Working alongside over
system will evolve. year. 100 private sector and third-party investment
The ambitious actions we are taking include:
We will continue to explore actions Government partners, GIB committed £3.4 billion of its own
• The Government setting out its expectation capital to 100 projects with a total value of
can take to green the UK’s financial system
for all listed companies and large asset over £12 billion9. And the transition to a clean
and will publish an interim report by the end of
owners to disclose in line with the TCFD and resilient economy will hugely expand the
2020. The report will examine progress on the
recommendations by 2022; opportunity for green finance investments –
implementation of the TCFD recommendations.
• Establishing a joint taskforce with UK from homes to power generation to our natural
Building on the UK’s international experience, environment.
regulators, chaired by Government, which
including the Bank of England’s involvement in
will examine the most effective way to
the Central Banks’ and Supervisors’ Network for
approach disclosure, including exploring
Greening the Financial System (NGFS), we will also
the appropriateness of mandatory
use our influence to strive towards the greening of
reporting;
the global financial system. This will include:
• Supporting quality disclosures through data • Playing an active role as a founding
and guidance, such as that being prepared member of the Coalition of Finance
for occupational pensions schemes by a Ministers for Climate Action;
new Government and regulator sponsored
working group; • Co-leading, alongside Egypt, an adaptation
and resilience strand at the UN Climate
• Clarifying responsibilities for the Prudential
Action Summit;
Regulation Authority, the Financial Conduct
Authority (FCA) and the Financial Policy • Partnering with the private sector to drive
Committee to have regard to the Paris the phase-out of unabated coal power and
Agreement when carrying out their duties, develop sustainable supply chains;
and including climate-related financial • Exploring initiatives to accelerate the
issues in Government’s allocation letter to alignment of financial flows to the Paris
The Pensions Regulator; Agreement’s objectives; and
• Working with industry and the British • Aligning the UK’s Official Development
Standards Institution to develop a set Assistance (ODA) with the Paris
of Sustainable Finance Standards, and Agreement.
8 9
 Green Finance Strategy

Our strategy for mobilising green investment will • We are working with governments such • Promoting the adoption and mainstreaming Conclusion
build on our excellent track record and has four as China, Brazil and Mexico to develop of green finance products and services,
Green finance brings together many of the
primary elements: green finance markets, through the including through the launch of a Green
UK’s strengths. This document builds on these
UK Partnering for Accelerated Climate Home Finance Fund making £5 million of
• Establishing robust, long-term policy strengths. It sets out a strategic framework for
Transitions (UK PACT) programme and the funding available to the private sector to
frameworks; green finance, outlines the breadth and depth of
Prosperity Fund. pilot products such as green mortgages;
• Improving access to finance for green activities already underway and sets out ambitious
and
investment; Capturing the commercial opportunity policy proposals to strengthen our global
• Engaging with professional bodies to drive leadership and deliver on our vision of a global
• Addressing market barriers and building Green Finance brings together many areas where green finance competencies - notably financial system fit to deliver a net zero future.
capability; and the UK has expertise, not just in financial services through the launch of a Green Finance
but also in encouraging innovation, analytics The Government recognises that delivering
• Developing innovative approaches and new Education Charter - upskilling the UK’s
and low carbon technology, working with civil the systemic changes required to align
ways of working. diplomatic networks and building capacity
society and providing intellectual leadership in an private financial flows with clean, resilient and
on green finance across the public sector..
The ambitious actions the Government is taking environmentally sustainable growth will require
evolving landscape. The Industrial Strategy set out
within this include: collaborative efforts across the public and private
our aim to make the UK the global standard setter
• Announcing a package of measures to for finance that supports clean growth and allow sector, and that leadership on green finance will in
mobilise green finance for home energy us to maximise the opportunities of the global and turn strengthen the competitiveness of the UK
efficiency; domestic shifts to clean growth. financial sector.

• Using the forthcoming Environment Bill to The UK has a strong record in green financial We will also explore actions Government can
place the 25 Year Environment Plan on a innovation ranging from Yieldcos, green bonds take to ensure a just transition and linkages with
statutory footing; and environmental, social and governance (ESG) related policy areas, such as impact investing.
Exchange Traded Funds listed on the London We will formally review progress against the aims
• Determining the steps necessary for
Stock Exchange Group to green mortgages and and objectives of this strategy in 2022.
landlords and businesses to understand
and potentially disclose operational energy retail investment platforms.
use; To ensure the UK continues to capture the
• Strengthening engagement with local commercial opportunities arising from the
actors to accelerate green finance across ‘greening of finance’ and the ‘financing of green’,
the country; our strategy aims to:
• Working with the GFI to address market • Consolidate the UK’s position as a global
barriers to greater and more rapid hub for green finance;
deployment of green capital into priority • Position the UK at the forefront of green
sectors; and financial innovation and data and analytics;
• The National Infrastructure Commission and
examining the resilience of the UK’s
• Build skills and capabilities on green
infrastructure to consider what action
finance.
Government should take to ensure it is
resilient to future changes, such as climate The actions the Government is taking within this
change10. include:

The Government is also mobilising green • Launching the GFI to strengthen public and
investments internationally: private sector collaboration and cement
the UK’s position as a global hub for green
• Since 2011, our International Climate
finance;
Finance has mobilised £910 million of
private finance and £3.3 billion of public • Enhancing climate-related and
finance in key sectors including forestry environmental data and analytics and
and land use, industrial decarbonisation, promoting dialogue with regulators and
sustainable infrastructure and energy industry to support innovation;
transitions11.
10 11
 Green Finance Strategy

Introduction

The environmental challenge Ecosystems Services (IPBES) Global Assessment

Report showed how humans have significantly
Our environment is changing. Human activity altered nature across the globe16. Some 75% of
has increased the amount of greenhouse gases land surface is significantly altered, over 85% of
in the atmosphere to levels higher than at any wetlands (area) have been lost, and 66% of the
time during the last 800,000 years. These trends ocean area is experiencing increasing cumulative
are driving global average temperature rise at impacts. An average of around 25% of species in
a current rate of about 0.2°C per decade12 and assessed groups are threatened, suggesting that
accelerating the number of species that are around 1 million species already face extinction –
becoming extinct. many within decades.
The Intergovernmental Panel on Climate Change’s People and ecosystems worldwide are already
(IPCC) Special Report on Global Warming of feeling the impacts of these changes, as
1.5°C showed that humans have caused around warming has contributed to more frequent and
1°C of global warming since the pre-industrial more intense extreme weather events such as
era (1850-1900), with much greater warming heat waves and heavy rainfall17. This is already
in some regions, particularly the Arctic13. Earth impacting our financial system. For example,
has experienced major climate shifts in the past, direct and insured losses from weather-related
but since the 1950s, many of the changes are disasters have increased significantly in recent
unprecedented over centuries to millennia14. decades - 2017 was the costliest year for insurers
If greenhouse gas emissions continue at their for weather disasters at $132 billion18.
current rate, global mean surface temperature
could rise by more than 4°C above pre-industrial Within the UK, we have increased our
levels by 210015. understanding of the public health impacts and
And climate change is just one factor driving the costs to society resulting from poor air quality.
biodiversity loss, along with changes in land and Our latest set of appraisal tools indicate that the
sea use, direct exploitation, pollution and invasion population health impacts of not delivering on our
of alien species. The recent Intergovernmental emission reductions could be around £1.7 billion
Science and Policy Platform on Biodiversity and per annum by 2020 and £5.3 billion per annum by
2030.

Global temperature change in degrees celsius since 1850

1.5

0.5

-0.5
1850

1855

1860

1865

1870

1875

1880

1885

1890

1895

1900

1905

1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015
Source: Met Office Hadley Centre

12 -1.5 13
 Green Finance Strategy

Why finance is part of the multiple benefits that healthy ecosystems provide
to people’s lives. Our environment underpins our
Figure 1 – The UK’s leadership on green finance
solution prosperity and we see the economic benefits that

The UK Emission Trading System (UK ETS), the first
2001
Limiting global warming to 1.5°C may still be flow from natural capital in increased productivity national, multi-sector emission trading programme, was
established (it was subsequently scaled up and replaced 2018 The Green Finance Taskforce, chaired by Sir Roger
feasible. In the next decade urgent, ambitious and well-being. by the EU ETS). Gifford, publishes its report ‘Accelerating Green
Finance’.
and concerted action is required across all And here too we are cooperating internationally
2005 UNPRI established and headquartered in London. The Parliamentary Environmental Audit Committee
countries and sectors globally to deliver emissions alongside the 196 Parties to the Convention publishes two reports on green finance following their
reductions, as well as directly remove some green finance inquiry (and Government publishes its
on Biological Diversity to develop a new global responses).
greenhouse gas from the atmosphere. To do biodiversity framework for the post-2020 period The Stern Review on the Economics of Climate The world’s first Green Finance Certificate launched
2006
this requires unprecedented change in how we to combat global biodiversity loss. This new Change was published, commissioned by the UK by the Chartered Banker Institute.
Government with analysis by the Treasury under the
invest, measure risk and assign value to assets. framework will address major global challenges to leadership of Lord Nicholas Stern.
Chancellor announces the establishment of the Green
Finance Institute - co-funded by Government and the
The IPCC estimate that for a 1.5°C trajectory biodiversity, including those identified by IPBES. 2008 The Climate Change Act was adopted by Parliament- City of London Corporation.
annual average investments in low-carbon energy making the UK the first country in the world to enshrine
Department of Work and Pensions (DWP) clarifies
Global recognition of the importance of the its carbon reduction targets into legislation.
technologies and energy efficiency need to be trustees’ fiduciary duty in relation to Environmental,
financial sector in delivering an orderly transition Social and Governance (ESG) factors, including climate
upscaled by roughly a factor of six by 2050 2009 The first green bond listed on the London Stock change.
to cleaner, more resilient economic growth, Exchange by the World Bank.
compared to 2015, overtaking investment in fossil UK hosts first Green Great Britain Week - with Green
and delivering global climate and environment Finance as a core theme.
fuels globally by around 202519.
objectives has led to the rapid growth of green 2011 The UK launched its innovative £3.87 billion The PRA publishes its report “Transition in thinking:
Recognising this need for urgent and coordinated finance globally. This has been increasingly the International Climate Fund The impact of climate change on the UK banking
sector”.
action, 195 countries signed the Paris Climate case in recent years as the financial risks and The Financial Conduct Authority publishes a
Accord in 2015 which commits signatories to opportunities are becoming better understood. 2012 The Green Investment Bank was established, discussion paper on climate change and green finance.
keeping a global temperature rise this century to The UK has played a key role in driving this becoming the world’s first such institution.
well below 2°C above pre-industrial levels and to growth and shaping the agenda on green finance UK Government establishes the world’s first Natural 2019 The PRA and FCA jointly establish the Climate
Capital Committee. Financial Risk Forum.
pursue efforts to limit the temperature increase (see Figure 1).
The PRA publishes its supervisory statement:
even further to 1.5°C. Signatories of the Paris 2015 Transport for London issued its green bond, the first “Enhancing banks’ and insurers’ approaches to
In recognition of the vital role of the financial by a UK public agency. managing the financial risks from climate change”.
Agreement also committed to making finance
sector in delivering global and domestic climate The PRA publishes its report on the impact of UK becomes a founding member of the World Bank’s
flows consistent with a pathway towards low climate change on the UK insurance sector setting out a Coalition of Finance Ministers for Climate Action.
and environmental objectives, green finance is at framework for climate-related financial risks.
greenhouse gas emissions and climate-resilient The Treasury Select Committee launches new inquiry
the heart of the UK’s Clean Growth Strategy, 25
development. Mark Carney delivers his “Breaking the tragedy of the into the decarbonisation of the UK economy and green
Year Environment Plan and Industrial Strategy horizon” speech at Lloyd’s of London and spearheads finance.
the establishment of the Task Force for Climate-related
The IPBES Global Assessment Report shows that and supports the UK’s economic policy for strong, Financial Disclosures (TCFD) as Chair of the Financial The Bank of England announces plans to undertake
the financial sector has a crucial role to play in sustainable and balanced growth. Stability Board. a stress test of the financial system’s resilience to
climate-related financial risks.
the transformative change needed to restore and The UK commits a further £5.8 billion in International
Through the publication of our Green Finance Climate Finance. Government sets a net zero greenhouse gas
conserve nature, and this in turn helps us tackle emissions target for 2050.
Strategy we are clear in our ambition to align The G20 Green Finance Study Group, co-chaired by
climate change by storing carbon in our forests, 2016
private sector financial flows with clean, resilient UK and China, holds its first meeting under China’s G20 Government publishes its Green Finance Strategy.
wetlands and other ecosystems20. These form part Presidency. The Group’s synthesis report is welcomed at
and environmentally sustainable growth and the 2016 Leaders’ summit in September. The Green Finance Institute is launched with Dr.
of the world’s natural capital assets and we need Rhian-Mari Thomas appointed as CEO.
strengthen the competitiveness of the UK Launch of the City of London’s Green Finance
to value and manage them properly21. We need to Initiative and publication of its first report ‘Globalising
financial services sector. The UK and Egypt will co-chair the global effort to
build a sustainable economy that incorporates the Green Finance’. The Green Finance Initiative also forms
promote resilience and adaptation to climate change at
a partnership with China’s Green Finance Committee.
the UN’s Climate Action Summit in September 2019.
Over £12 billion total capital (£3.4 billion direct
commitment) mobilised by the Green Investment Bank
2020 Government will review progress in greening the UK’s
(GIB), supporting 100 projects across the UK with almost
financial system and publish an interim report, including
75% of investment coming from non- GIB sources.
progress on TCFD implementation.
The TCFD publishes their final recommendations –
2017 endorsed by UK Government. Government will conduct a formal review of progress
2022
against the Green Finance Strategy.
The Green Finance Initiative hosts its first Green
Finance Summit.
Government establishes the UK Green Finance
Taskforce and publishes the Clean Growth Strategy.
Central Banks and Supervisors Network for Greening
the Financial System (NGFS) is announced at the One
Planet Summit – with the Bank of England as a founding
member.

14 15
 Green Finance Strategy

Chapter 1: Greening Finance

Overview is on private sector flows, we recognise the

integration of climate and environmental factors
The transition to cleaner and more resilient also has relevance to financial decision-making in
growth is reshaping the global economy as the public sector.
countries, industries and institutions seek to
mitigate and adapt to the effects of climate
change and environmental degradation. This Mainstreaming climate and
economic transition is having significant and environment factors
far-reaching implications for the financial sector
as the financial risks and opportunities become The UK’s position as an international financial
more apparent. Momentum to green the financial centre means the leadership we demonstrate
system has grown significantly in recent years. in greening the UK financial system can have a
There is now widespread support for the Task wide-reaching impact, contributing to an orderly
Force on Climate-related Financial Disclosures global transition towards a cleaner, more resilient
(TCFD) recommendations and an increasing and environmentally sustainable economy. Our
number of high-profile global initiatives, such as strategy focuses on four elements:
the Sustainable Insurance Forum and the Central • Establishing a shared understanding;
Banks’ and Supervisors’ Network for Greening the
• Clarifying roles and responsibilities;
Financial System (NGFS), have been established.
• Fostering transparency and embedding a
However, this transformation must accelerate
long term approach; and
and proliferate in order to match the scale of the
challenge faced, particularly as we move to a net • Building robust and consistent green
zero economy. Consideration of the financial risks financial market frameworks.
and opportunities from climate and environmental
factors needs to move beyond ‘corporate social Establishing a shared understanding:
responsibility’ to become a financial and strategic Recent years have witnessed a ‘transition in
imperative and normalised as good business. This thinking’ on climate change as a core financial
chapter sets out how we will: issue. For example, the PRA’s 2018 review of
• Mainstream climate and environmental the UK banking sector found that 70% of banks
factors into the UK’s financial system; and consider climate change as a financial risk, arising
from both ‘physical’ and ‘transition’ factors
• Help drive forward the greening of the
(Box 1) 22.
global financial system.
However, in its first comprehensive report,
In taking forward our strategy, we will work
published in April 2019, the NGFS, of which
closely with the Financial Conduct Authority
the Bank of England is a founding member,
(FCA), the Financial Reporting Council (FRC),
highlighted that climate change is not only a
The Pensions Regulator (TPR) and the Bank of
source of financial risk but also has distinct
England (including in its capacity as the Prudential
characteristics (Box 2) 23.
Regulation Authority (PRA)). When we refer
to ‘the UK regulators’ in this Strategy we are The Government supports the findings of the
referring to all four of these bodies. NGFS report, and recognises these characteristics
make climate change different from other
And while the focus of the Green Finance Strategy
sources of structural change and mean it needs

16 17
 Green Finance Strategy

to be considered and managed differently. The long-term strategic view. environmentally sustainable economy will require The Government is also taking action to deepen
PRA’s 2018 review also found only 10% of banks the reallocation of tens of trillions of pounds of collective understanding in this area. For example,
Managing these financial risks and delivering
surveyed were managing the financial risks from capital, presenting significant opportunities for through the Government’s recent commission
an orderly transition to a clean, resilient and
climate change comprehensively and taking a the UK’s financial sector. to assess the economic value of biodiversity, as
discussed further in Box 3.
Establishing a shared understanding of the
financial risks and opportunities presented by
Box 1 – Climate related financial risk climate and environmental factors is in our view
necessary to set the foundation to deliver our Box 3 – The Economics of
Physical Risk:  green finance ambitions. The UK regulators Biodiversity
Physical risk resulting from climate change can be event-driven (acute) or longer-term shifts recognise this too, which is why: In the 2019 Spring Statement the UK
(chronic) in climate patterns. Physical risks may have financial implications for organisations,
such as direct damage to assets and indirect impacts from supply chain disruption. • The Financial Conduct Authority, Chancellor launched a global review, led
Organisations’ financial performance may also be affected by changes in water availability, sourcing, and Financial Reporting Council, The by Professor Sir Partha Dasgupta, to
quality; food security; and extreme temperature changes affecting organisations’ premises, operations, supply Pensions Regulator and Prudential assess the economic value of biodiversity.
chain, transport needs, and employee safety.
Regulation Authority have today The review will provide a basis in
published a joint statement on climate economic theory for moving the dial on
Transition Risk:  change, which the Government fully global action on biodiversity, broadening
Transitioning to a lower-carbon economy may entail extensive policy, legal, technology, and the debate from science to the potential
market changes to address mitigation and adaptation requirements related to climate change. supports. The Statement recognises the
catastrophic impacts for global welfare
Depending on the nature, speed, and focus of these changes, transition risks may pose varying relevance of climate-related financial
levels of financial and reputational risk to organisations. if current trends continue unabated. The
factors to their mandates and the
review will aim to facilitate increased
importance of a collective response.
international ambition, by identifying
The Government is also taking action. We are actions that will simultaneously enhance
working with partners, including the Green biodiversity and deliver economic
Finance Institute (GFI), to host a series of prosperity.
Box 2 – Distinct characteristics of climate change that require a roundtable discussions with Board and Executive
different approach level representatives from across the financial
sector to reinforce the relevance of the financial
Far-reaching impact in breadth Irreversibility: the impact of risks and opportunities arising from climate Clarifying roles and responsibilities
and magnitude: climate change climate change is determined by change, highlight the importance of urgent action
The greening of finance covers a complex set of
will affect all actors in the the concentration of greenhouse and exchange views and experiences. We call
issues involving multiple actors across financial
economy, across all sectors and gas emissions in the atmosphere on senior leaders from across the UK financial
services and beyond. A clear understanding of the
geographies. The risks will likely and there is currently no mature system to use their signalling and convening
roles and responsibilities of the private sector, UK
be correlated with and potentially technology to reverse this process. power to promote this shared understanding and
regulators and Government will be important as
aggravated by tipping points, in Above a certain threshold, scientists to catalyse progressive action on climate change
responses continue to evolve.
a non-linear fashion. This means have shown with a high degree of within the financial sector.
Further to their joint statement, the Government
the impacts could be much larger, confidence that climate change will The Government recognises that environmental
welcomes the actions UK regulators are
and more widespread and diverse have irreversible consequences degradation and the decline of natural capital,
taking to embed climate considerations into
than those of other structural on our planet, though uncertainty including biodiversity loss, can also be a source
their supervisory practices and approach (see
changes. remains about the exact severity of financial risk. As co-chair of the G20’s Green
table overleaf). This includes the integration
and horizon. Finance Study Group24 in 2017, the UK led work to
of environmental, social and governance
Foreseeable nature: while the advance Environmental Risk Analysis 25 (ERA) and
considerations into codes and guidance, and
exact outcomes, time horizon and Dependency on short-term actions: the need for better data. We welcome research,
setting expectations for firms to take a strategic,
future pathway are uncertain, the magnitude and nature of the including from central banks26, to further examine
Board-level and long-term approach.
there is a high degree of future impacts will be determined the financial significance of these issues.
certainty that some combination by the actions taken today, which
of physical and transition risk will thus need to follow a credible and
materialise in the future. forward-looking policy path.

18 19
 Green Finance Strategy

The UK Regulators and Climate Change

The Bank of England - Prudential Regulation Authority The Financial Conduct Authority The Financial Reporting Council The Pensions Regulator

Remit The Prudential Regulation Authority (PRA) sits within The Financial Conduct Authority (FCA) The Financial Reporting Council (FRC) is the UK’s The Pensions Regulator (TPR) is the public body that
the Bank of England and is responsible for the prudential is the conduct regulator for 56,000 independent regulator for accountants, actuaries and protects the UK’s workplace pensions. TPR makes sure
regulation and supervision of around 1,500 banks, building financial services firms and financial auditors, responsible for promoting transparency and employers, trustees, pension specialists and business
societies, credit unions, insurers and major investment markets in the UK and the prudential integrity in business. It also sets the UK Corporate advisers can fulfil their duties to scheme members. It has a
firms. regulator for over 18,000 of those Governance Code and Stewardship Code. role in driving up standards of governance and trusteeship.
firms.

Joint The UK’s regulators have published a joint statement on climate change to set out how
statement on
climate change climate-related financial risks require a coordinated approach and collective action to address.

Action on Published reviews into the financial risks from climate Extending the remit of the The Corporate Governance and Stewardship Codes Updating Defined Contribution investment guidance to
climate change change facing the insurance sector and banking sectors. Independent Governance Committees encourage companies and investors to report on how they reflect Government regulation to clarify and strengthen
These reviews set out how climate change poses financial to cover consideration of firm’s have taken into account long-term sustainability factors trustees’ duties, including in relation to Environmental,
risks to these firms, and how these risks have distinct Environmental, Social and Governance (including environmental factors) into their decision Social and Governance considerations, including climate
characteristics that require an enhanced approach. priorities and how they respond making. change.
to member concerns, subject to
Published a Supervisory Statement to enhance banks’ Jointly with the FCA, the FRC also published a Discussion Contributed to the revised Stewardship Code
consultation.
and insurers’ approaches to managing the financial Paper on building a regulatory framework for effective consultation welcoming the code as a tool to improve
risks from climate change, setting out expectations for Launched a Green FinTech Challenge stewardship. investment governance and risk management on
firm’s practices across governance, risk management, to encourage firms to develop Environmental, Social and Governance issues, including
Through the Joint Forum on Actuarial Regulation, the
scenario analysis, and disclosure. innovative solutions to support the climate change.
FRC highlights the risks to high quality actuarial work
UK’s transition to cleaner economic
Asked insurers to consider the impact of different arising from climate change in the annual Risk Perspective. Co-established an industry working group on climate
growth.
physical and transition risks scenarios as part of a UK change to produce guidance for pension schemes
The FRC monitors whether companies are complying
market-wide insurance stress test. Established the Climate Financial on climate-related practices across governance, risk
with the statutory disclosure requirements of the
Risk Forum, jointly with the PRA management, scenario analysis, and disclosure. TPR expect
Announced plans to test the financial system’s strategic report (which includes reporting on principal
to build intellectual capacity across to consult on this guidance in late 2019 with a view to
resilience to climate-related financial risks as part of the risks and uncertainties) as well as any financial statement
the private sector for assessing the putting it on a statutory footing during 2020 as part of the
Biennial Exploratory Scenario (BES) stress test. implications of climate change.
financial risks from climate change. Governance Code required by the Occupational Pension
Established the Climate Financial Risk Forum, jointly The FRC’s audit monitoring will consider the adequacy of Schemes (Governance) (Amendment) Regulations 2019.
Published a discussion paper on
with the FCA, to build intellectual capacity across the the auditors’ work over principal risk disclosures (including
climate change and green finance Monitoring the landscape through questions on climate
private sector for assessing the financial risks from climate climate risk) and the financial statement implications of
setting out a range of proposals in change in annual governance surveys of Defined Benefit
change. climate change.
relation to climate change. and Defined Contribution schemes.
Co-founded the Network for Greening the Financial The Financial Reporting Lab will produce a report this
Joined the IOSCO sustainable
System and chair work stream two on macroeconomic and year that will provide practical guidance on best practice
finance network to collaborate with
financial stability implications of climate change. climate reporting.
other IOSCO members on sustainable
Promoted the importance of climate-related disclosures finance issues. The FRC’s project on the Future of Corporate Reporting
by supporting TCFD, which was set up under the will consider the need for improved sustainability
Introduced new requirements to
Governor Mark Carney in his role as FSB chair. information from companies.
improve shareholder engagement
Announced its intention to undertake climate and increase transparency around
disclosures in line with the TCFD that will outline how the stewardship.
Bank of England manages the financial risks from climate
Launched a Discussion Paper on
change, becoming the first central bank to do so across its
building a regulatory framework for
entire operations.
effective stewardship, jointly with the
Co-founded the Sustainable Insurance Forum to bring FRC, to consider how asset owners and
together insurance supervisors and regulators to address asset managers can most effectively
sustainability challenges. integrate climate change and other
environmental, social and governance
Undertook analysis on the green mortgage market,
factors into their investment activities.
considering the relationship between energy efficiency and
credit risk.

Adaptation The UK regulators will submit a report on actions they are taking to strengthen preparedness These reports will provide vital intelligence on the interaction between financial regulation and climate change
Reporting to climate change impacts in their respective remits under the Adaptation Reporting Power, and will provide the opportunity to collectively strengthen existing approaches as well as to inform future
along with 84 other organisations27. Government action.

*The Prudential Regulation Authority published a Climate Change Adaptation Report as part of the second
round of adaptation reporting powers under the Climate Change Act28.
20 21
 Green Finance Strategy

We recognise that the Government also functions is reflected in the next Letter Fostering transparency and Setting expectations and ensuring a
has a responsibility to act. We have already of Recommendations that HM Treasury embedding a long-term approach coordinated approach on TCFD
delivered on the Green Finance Taskforce’s issues to each authority31. Likewise we
recommendation to strengthen and clarify will ensure there is a similar provision in One of the essential functions of financial markets In 2015, in response to a call from G20 leaders,
trustees’ investment duties so that from the remit and recommendations letter is to price risk to support informed, efficient the Financial Stability Board (FSB) established
October 2019 occupational pension schemes that HM Treasury issues to the Financial capital-allocation decisions. As firms develop their the private sector TCFD to enhance transparency
will be required to publish their policy on Policy Committee32. response to the financial implications of climate on the financial risks and opportunities from
financially material considerations, including change their approaches must be built upon climate change37. One area of innovation the TCFD
• For The Pensions Regulator, we will be transparent and decision-useful climate-related introduced was around scenario analysis which
those arising from climate change29. This
including climate-related financial issues information and a long-term approach. The can foster a longer-term approach to considering
will also require relevant schemes to publish
in the Government’s allocation letter Government will take action by: climate-related financial risks and opportunities.
their policies in relation to the stewardship of
with a view to embedding considerations
investments. The Asset Management Taskforce, • Setting expectations and ensuring a The Government formally endorsed the TCFD
in other documents when the opportunity
launched by the Government in October 2017, coordinated approach on TCFD; recommendations in September 201738. We
arises.
has recently established a stewardship sub-group welcome the progress being made implementing
The Government welcomes the actions that • Supporting high quality TCFD disclosure
that will consider how the Taskforce can promote the recommendations on a voluntary basis. The
leaders from across the financial sector have and reviewing progress; and
and enhance the UK as a centre of excellence for Government expects all listed companies and
sustainable stewardship30. already taken to galvanise action. • Building on TCFD to broaden action on large asset owners to be disclosing in line with
For example, the Transition Pathway Initiative transparency. the TCFD recommendations by 2022.
The Government will be taking additional action
to strengthen our response by clarifying the roles (TPI) (see Case Study) helps asset owners
and responsibilities of the UK regulators to take research and track investments and engage with
account of these issues. individual companies on how they manage their
greenhouse gas emissions33. We encourage market
• For the Prudential Regulation Authority Box 4 – The TCFD recommendations
participants to sign up to voluntary principles as
and Financial Conduct Authority,
relevant to their sector, such as the UN Principles The TCFD has established a globally recognised framework through which exposure to climate-
we will ensure that the need to have
for Responsible Investment, UN Environment related financial risk and opportunities can be disclosed. A total of 785 organisations are now
regard to the COP21 Paris Agreement
Programme Finance Initiative’s Principles supporters of the TCFD, including the world’s largest banks, asset managers and pension funds,
when considering how to advance
for Sustainable Insurance and Principles for responsible for assets of $118 trillion.
their objectives and discharge their
Responsible Banking34,35, 36.

Core Elements of Recommended Climate – Related Financial Disclosures

Case Study: The Transition Pathway Initiative – pension funds going green
The TPI is a global initiative to assess companies’ preparedness for the transition to a low-carbon
economy. It was initially established as a joint initiative between the Environment Agency Pension Governance
Governance The organisation’s governance around climate-related risks
Fund and the Church of England National Investing Bodies to support efforts to address climate
and opportunities
change.
Strategy
Today, over 40 investors globally have pledged support for the TPI. Jointly they represent over Strategy The actual and potential impacts of climate-related risks and
£10.3 trillion of combined assets under management. The online tool, which is free-to-use and open- opportunities on the organisation’s businesses, strategy,
to-all, has analysed the performance of 300 companies in 14 sectors, including the airline and car Risk and financial planning
industries. This sort of information helps asset owners research and track investments and engage Management Risk Management
with individual companies on how they manage their greenhouse gas emissions. The processes used by the organisation to identify, assess,
and manage climate-related risks
“Businesses should be able to explain to investors how they plan to manage climate change risks,
Metrics and Targets
invest and innovate on the way to the zero-carbon economy of the future. With the launch of the Metrics
The metrics and targets used to assess and manage
Transition Pathway Initiative, asset owners from around the world are sending a strong signal and Targets relevant climate-related risks and opportunities
that portfolios will align in the future with companies that are taking the transition to a low carbon
economy seriously” – Emma Howard-Boyd, Chair of the Environment Agency and UK Commissioner
to the Global Adaptation Commission.

22 23
 Green Finance Strategy

We also welcome the actions being taken by UK effective way to approach disclosure, We are also taking action to support the Building on TCFD to broaden action on
regulators with respect to disclosure. For example, including exploring the appropriateness implementation of TCFD through guidance: fostering transparency
in their October 2018 discussion paper on climate of making reporting mandatory. • The Government and The Pensions The TCFD recommendations have been
change and green finance, the FCA sought views Regulator have jointly established an
• Taking forward discussions with instrumental in developing a framework for
on the value of introducing a requirement for industry group to develop TCFD guidance
relevant international standard setters disclosing climate-related financial risks and
financial services firms to report publicly on how for pension schemes. The Pensions
to promote internationally consistent opportunities. Actions to foster transparency
they manage climate risks to their customers and Regulator expect to consult on this
disclosure. can also support the Government’s domestic and
operations as well as feedback on further steps guidance in late 2019 with a view to international commitments on the environment
it should consider to improve climate-related Supporting quality TCFD disclosure putting it on a statutory footing during and sustainable development. That is why the
disclosures by issuers of securities admitted to 2020 as part of the Governance Code
and reviewing progress Government is supporting the work of the World
trading on a regulated market39. The PRA have required by the Occupational Pension Benchmarking Alliance to develop transformative
published a supervisory statement to enhance Disclosure is only useful if it guides decision- Schemes (Governance) (Amendment) benchmarks that will compare companies’
banks’ and insurers’ approaches to managing making. The Government recognises there are still Regulations 2019. performance on key areas of sustainability and
the financial risks from climate change, including challenges for industry in developing approaches
The Government will work closely with the GFI impact on the UN Sustainable Development Goals.
setting expectations on disclosure40. to implementing the TCFD recommendations and
to build capacity on TCFD-related issues and Recent reports such as those from the
that best practice will take time to develop.
To meet the ambition of this strategy, we welcomes the actions UK regulators, and other Intergovernmental Science and Policy Platform on
believe there needs to be an improvement in the Supporting the private sector to address these actors, are taking, including: Biodiversity and Ecosystems Services (IPBES)44
quality and quantity of climate-related financial challenges, for example through climate and
• The PRA and FCA’s initiative to establish and the OECD45 are strengthening the evidence
disclosure. Consistent with the recommendation environmental related data and analytics, presents
a Climate Financial Risk Forum to build base on the potential systemic economic and
of the NGFS that policymakers and supervisors a significant commercial opportunity for the UK,
capacity and share best practice across financial impacts of nature-related issues such
consider further actions to foster broader as explored further in Chapter 3.
financial regulators and industry in order to as biodiversity loss and the private sector have
adoption of the TCFD recommendations, the We recognise the Government can also play advance financial sector responses to the highlighted the need for a complementary
Government will be: an important role in providing climate-related financial risks from climate change41; approach to TCFD on these broader issues46.
• Establishing a joint Taskforce with UK information to the market in a proportionate
• The NGFS taking forward work to To accelerate progress, the Government will:
regulators, chaired by the Government, manner, as evidenced by our approach to
provide a small number of high-level • Work with international partners to
to ensure a co-ordinated approach streamlining the UK’s energy and carbon reporting
scenarios which can be used by industry catalyse market-led action on enhancing
on climate-related financial issues. framework.
to support implementation of the TCFD’s nature-related financial disclosures.    
The Taskforce will examine the most
recommendations42; and
Work in this area will help companies understand
• Initiatives such as the TCFD Knowledge what financial markets require from disclosure in
Hub43, which provides resources to support order to measure and respond to nature-related
Case Study: The Streamlined Energy and Carbon Reporting (SECR) Framework TCFD implementation, powered by the financial risks, building on a report47 presented to
Climate Disclosure Standards Board. the G7 Environment Ministers’ meeting in May this
The Government has introduced a new Streamlined Energy and Carbon Reporting framework
which came into force from 1 April 2019 to simplify carbon and energy reporting requirements The Government also recognises we have an year. It will also complement the global review of
for businesses. This new framework will extend the number of organisations required to report important role, working closely with other the economics of biodiversity led by Professor Sir
on their energy use and emissions in their company annual reports, as well as an intensity metric stakeholders, in reviewing progress. That is why: Partha Dasgupta, discussed earlier in Box 3.
and energy efficiency action in the previous 12 months. This mandatory reporting obligation now • The Government will continue to explore Catalysing market-led action will mirror the
falls on all large or quoted companies and large limited liability partnerships incorporated in the actions we can take to advance the success of the TCFD’s approach by supporting
UK, an estimated 11,900 organisations, increasing the coverage from an estimated 1,200 quoted greening of the UK financial system and the private sector to develop consistent and
companies. This broadening and simplification of energy and carbon disclosures will provide a level will publish an interim report by end comparable disclosures in order to better manage,
playing field in reporting across large businesses. of 2020, including progress on TCFD measure and respond to nature-related financial
We are working with the FRC to help facilitate digital reporting of SECR disclosures and to ensure implementation. risks.
the information is more accessible for external stakeholders. Improving financial risk understanding
related to biodiversity loss and natural capital
degradation will also support financial institutions
and policymakers to differentiate between

24 25
 Green Finance Strategy

companies and projects that are aligned with participate in Council discussions on the taxonomy 731 to open for consultation soon thereafter. The synthesis report was welcomed at the
the implementation of international biodiversity file and the Member States Expert Group. Government encourages all interested parties leader’s summit in China and provided
commitments, the UN Sustainable Development to respond to the consultation to help ensure global signalling to policymakers and
To ensure the Government has the option
Goals and the UK’s 25 Year Environment Plan. the standards are robust and drive increased financial markets worldwide of the need
of onshoring the EU’s proposals into UK law,
alignment of activity with our global sustainability for green finance. The UK has continued to
regardless of the EU Exit outcome, all three files
Building robust and consistent green are included as part of the Financial Services
goals. chair the group with China under Germany
financial market frameworks (Implementation of Legislation) Bill. The International Organisation for Standardisation
and Argentina’s G20 Presidencies;
Clear and consistent frameworks, such as green (ISO) has established a new Technical Committee • HM Treasury recently became a founding
definitions and standards, will be important to Creating sustainable finance standards on Sustainable Finance which is chaired by the member of the Coalition of Finance
ensure confidence in the effective functioning Together with the private sector, we have funded UK49. The Technical Committee will develop Ministers for Climate Action and endorsed
of green financial markets. The Government will the British Standards Institution (BSI) to design international standards on the topic of sustainable the Helsinki principles with 21 other
be taking action through matching the ambition and roll out a programme of internationally finance, and the UK-led PAS work will look to finance ministers. The Coalition, which was
of the objectives of the EU’s Sustainable Finance relevant standards on Sustainable Finance, inform and feed into this activity. formed in April 2019, convenes finance
Action Plan, creating Sustainable Finance starting with the development of three new ministers committed to taking collective
standards and working with the Fair and Effective The Fair and Effective Markets Review (FEMR) and domestic action on climate change and
Publicly Available Specifications (PAS). The scope
Markets Review. of the three PAS documents has been established The FEMR is a working group, led by the Bank of achieving the Paris Agreement’s objectives;
following an extensive industry engagement England and co-chaired with HM Treasury and the • The Governor of the Bank of England
The EU’s Sustainable Finance Action Plan exercise, and the BSI continues to coordinate FCA50. Putting good conduct and accountability at chaired the Financial Stability Board (FSB)
The Sustainable Finance Action Plan was launched with industry leaders as these documents are the heart of financial markets, the FEMR will: during the development of the TCFD
by the European Commission in May 2018 as developed. Two of the Sustainable Finance PAS recommendations and the Bank of England
• Work to understand the potential
part of the EU’s response to the Paris Climate standards currently in development are: was a founding member of the NGFS; and
or actual barriers to the growth and
Agreement48. Its three objectives are: • PAS 7340: Sustainable Finance effectiveness of green finance. • UK financial services expertise has
• To reorient capital flows towards Framework:  A guide to outline a contributed to the EU Sustainable Finance
This will engage a broad range of market
sustainable investment; framework for, and provide guidance on, Action plan.
participants to gather views on the level of
implementing principles and approaches
• To manage financial risks stemming transparency and disclosure. It will also explore Recent years have witnessed significant progress.
to sustainable finance within financial
from climate changes by considering metrics for measuring the impact of green finance Through the actions of central banks and the
services organisations. It establishes
environmental and social goals in financial and assess the availability of comparable data. private sector there is increasing momentum to
guiding principles and common terms and
decision-making; and This exercise will feed into the work of the PRA/ integrate climate and environmental factors more
definitions related to sustainable finance to
FCA’s Climate Financial Risk Forum and inform comprehensively into the global financial system.
• To increase transparency in financial help organisations of all sizes and sectors.
the continued development of the Government’s The real-world economic changes needed to shift
products so that citizens can make
• PAS 7341: Sustainable Investment Green Finance Strategy. Overall, the work is investment, supported by global initiatives such as
informed decisions about their investments.
Management: A specification setting intended to support the development of the green the Green Climate Fund, are underway.
The UK has formerly endorsed these objectives out requirements to establish, finance market, which will play a vital role in the
and will continue to use its knowledge and At the same time, we recognise further urgent
implement, and manage the process of UK’s transition to a clean and resilient economy.
expertise to support the EU’s objectives on action is required to meet the challenge set in the
integrating responsible and sustainability
Sustainable Finance. 2015 Paris Agreement to align financial flows with
considerations into investment
management. It includes stewardship Driving the greening of the low carbon and resilient growth.
• The Government commits, in relation
to green finance, to at least match the and the levels of engagement needed global financial system The Government commits to using the UK’s
ambition of the three key objectives to demonstrate ongoing sustainable global influence to promote the greening of
The UK has taken a leading role in shaping the
included in the EU’s Sustainable Finance investment management and practices. the financial system internationally. This
global agenda on climate change and green
Action Plan. includes playing an active role in the Coalition
The BSI are currently refining the scope of the finance, including through our representation in
of Finance Ministers for Climate Action;
In accordance with the EU Sustainable Finance third PAS which will seek to set out requirements international forums and our extensive diplomatic
leading on the adaptation and resilience strand
Action Plan, the EU proposed three legislative for the assessment, governance, labelling and network. These include for example:
at the United Nations (UN) Climate Action
files. These are on disclosures, benchmarks, and communication of funds presented as having
• Establishing the G20 Green Finance Study Summit; and exploring initiatives to accelerate
a new sustainable finance framework (commonly sustainable credentials.
Group with China in 2016 which provided alignment of finance ahead of COP26 in 2020.
known as a taxonomy). The UK has been closely The Draft PAS 7340 is expected to undergo public options to G20 members on how to scale
involved in all three files and continues to consultation in July-August, and we expect PAS up green finance globally51. The Group’s

26 27
 Green Finance Strategy

To drive the greening of the global financial plan and invest their resources to adapt to current
system, the Government will: climate impacts and build resilience for the future.
These build on a number of the recommendations
• Champion the resilience agenda;
outlined in this strategy. The governments of
• Drive action through international Bangladesh, Malawi, the Netherlands and St Lucia
collaboration; are working with us to achieve this supported by
• Partner with the private sector; the United Nations Development Programme, and
working closely with the Global Commission on
• Explore initiatives to accelerate alignment Adaptation, the World Bank, the World Economic
to the Paris Agreement; and Forum and the UN Environment Programme.
• Align the UK’s Official Development
Assistance (ODA) spending with the Paris Driving action through international
Agreement. collaboration
Addressing the financial risks and opportunities
Championing the resilience agenda
arising from climate change and environmental
Building resilience to the physical risks from degradation is a global challenge, and requires
climate change will be essential as global a collective, global response. We will drive
temperatures increase. More fully integrating international collaboration through our bi-lateral
physical risks into the financial system and partnerships, our long-standing relationships with
ensuring adaptation as well as mitigation is international organisations and our international
sufficiently addressed will be a key focus of our network.
strategy. That is why the UK and Egypt will co-
Partnerships are key to our work. The UK’s regular
chair the global effort to promote resilience and
Economic and Financial Dialogues with China (see
adaptation to climate change at the UN’s Climate
Case Study), Brazil and India include green finance
Action Summit in September 2019.
as an area for collaboration in financial services. In
The Government aims to promote systemic shifts 2018, we also strengthened our relationships with
in the way that public and private financial actors China, Colombia, and Mexico and Colombia though

Case Study: UK and China partnership on green finance

At the 9th and 10th UK-China Economic and Financial Dialogue (EFD) the UK and China recognised
each other as their primary partner in green finance for capital raising, product innovation and
thought leadership. We agreed a set of joint priorities which are now being supported by the UK
PACT programme. At the 10th EFD, the UK-China Green Finance Centre, launched by the City of
London Green Finance Initiative and the China Green Finance Committee in 2018, was formally
recognised by both governments.
This will build on the work of the UK-China Green Finance Taskforce, which launched in 2016
with the aim of increasing areas of collaboration on greening the Belt and Road Initiative, TCFD
implementation, ESG investing, green asset securitisation, and green standards, as well as capacity
building. The group jointly launched a three-year TCFD-implementation pilot where ten leading
financial institutions committed to adopting TCFD recommendations under the coordination of PRI
and published an Action Plan setting clear expectations for the pilot.
The group has also developed a series of Green Investment Principles to promote sustainable
infrastructure investment. As part of this work, a joint secretariat in the UK and China has been
established to further develop the principles, ensure robustness, and raise ambition for green, low-
carbon and climate-resilient investment. The joint Taskforce has also partnered on green and clean
technology and agreed to set-up the London-Beijing Green Technology Investment Gateway.

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 Green Finance Strategy

the UK Partnerships for Accelerated Climate mutual prosperity with our partners. Promoting the same ambitions. The GRI will also work closely In practical terms this will include:
Transitions (UK PACT) programme. the greening of finance internationally will be a with the GFI to support a shift towards investment
• Using an appropriate carbon price in
key part of the Government’s diplomatic strategy, that better accounts for the value of a healthy
The Government continues to support the relevant bilateral programme appraisal;
financial development and climate engagement, environment, a stable climate and natural capital.
greening of financial sector and building resilient
which is outlined in further detail in Chapter 3. • Ensuring any investment support for fossil
outcomes through our long-standing collaboration
with key international organisations. We will do
Exploring initiatives to accelerate fuels affecting emissions is in line with the

this, in part, via our role in the Coalition of Finance

Partnering with the private sector alignment to the Paris Agreement Paris Agreement temperature goals and
transition plans;
Ministers and in partnership with the World Bank The Government recognises we can also play a The Government recognises these actions alone
as its secretariat. role driving private sector action and collaboration will not create the incentives to redirect finance • Implementing a proportionate approach to
as part of our international strategy. For towards clean and resilient investments at climate risk assurance; and
The UK amplifies its international assistance
example, through the Powering Past Coal Alliance sufficient speed and scale to meet the challenge • Ensuring that relevant programmes do
by collaborating with multilateral development
(PPCA) the UK and Canada, supported by CCLA of the Paris Agreement. not undermine the ambition in countries’
banks (MDBs) and driving their climate ambition
Investment Management, have worked with Nationally Determined Contributions (NDC)
through Board and investment engagement. MDBs Collectively governments need to be able to track
leading institutions to establish Finance Principles and adaptation plans.
often have unrivalled reach in developing country economy-wide efforts to align financial flows and
with commitments on restricting financial
finance ministries, national development banks give political impetus to international activity. We will consider how to demonstrate that
services for new unabated coal power projects
and others. Further momentum is needed from the public on aggregate, our ODA is delivering climate
and supporting the phase out of existing capacity
As a Board Member and shareholder of the and private sector, including clarifying fiduciary benefits and supporting implementation of the
by 2030 in the OECD and 2050 in the rest of the
MDBs, the UK is using its expertise to drive duties and strengthening corporate governance, Paris Agreement. We anticipate this including
world. That is why the Government is:
ambition on increased leveraging of financial developing green taxonomies, enhancing climate- identifying opportunities to work with countries
• Launching the Powering Past Coal related financial disclosure and improving climate- to enhance and embed clean growth and climate
flows from private sources and in-country
Alliance Finance Principles, through related data and analytics. resilience, incorporating what is included in NDCs
policy support for greening economies. This
which financial institutions can commit and adaptation plans into their growth plans,
includes pushing MDBs to: raise ambition to align Ultimately, we need to strengthen and broaden
to support the phase out of unabated to help meet the long-term goals of the Paris
with the Paris Agreement, using their existing the international coalition driving action to green
coal power within Paris Agreement Agreement. We will encourage similar actions in
climate leadership to encourage climate action; the global financial system and to develop a
timeframes. relevant multilateral institutions and programmes,
adopt stretching private finance mobilisation common framework and roadmap around which
targets where appropriate; and advocate to Aviva plc, Hermes Investment Management and leaders, governments, central banks, financial where appropriate.
raise awareness of climate-related financial the Church Commissioners for England have regulators and the private sector can take the Our actions to align the UK’s ODA with the Paris
risks. This is especially important in their work joined the Alliance as founding signatories of collective action required. Agreement also demonstrate the Government’s
establishing capital markets in the developing the Finance Principles, alongside CCLA and commitment to leading by example by integrating
As the Government implements this strategy,
world – starting with implementing the TCFD Storebrand as existing PPCA finance members. climate and environmental factors into financial
we will utilise opportunities such as at the UN
recommendations across their own portfolios. We The UN-supported Principles for Responsible decision making in the public sector, as we discuss
Climate Action Summit in September and our
will also work with other institutions, including Investment initiative will be an official Partner to further below.
G7 Presidency in 2021, to consider how best to
for example the International Monetary Fund, to the PPCA.
champion action to align financial flows with the
achieve these objectives. The Government has also launched the Global
The Department for International Development Resource Initiative (GRI) to bring together
goals of the Paris Agreement. Government leading by
(DFID) and the Bank of England are also scaling up thought leaders across business, finance and Aligning the UK’s ODA with the Paris example
their partnership to build the capacity of central civil society on the issues of sustainable supply Agreement The focus of this strategy is on aligning private
banks in developing countries and the Government chains. These leaders will develop ambitious, sector financial flows with clean, resilient and
practical recommendations for how the UK can As the Government explores initiatives to align
will explore using this as a platform to share the environmentally sustainable growth. At the
reduce the ‘imported deforestation’ embedded global financial flows, we will be taking action
Bank’s expertise internationally in managing same time, the Government recognises the
in the commodities that we consume; improving to ensure UK Government leads by example
climate-related financial risk. integration of climate and environmental risks
the long-term resilience of our supply chains. The through aligning the UK’s Official Development
The Government’s international network, which Assistance spending with the Paris Agreement, and opportunities also has relevance to financial
Taskforce, to be chaired by Sir Ian Cheshire, will decision-making in the public sector. Therefore,
includes climate attachés across 58 countries strengthening the existing provisions in the UK
shape the direction of the Government’s policy while there is clear focus on the private sector,
worldwide, accompanied by our extensive trade Government’s guidance on considering climate
on sustainable trade while creating a model of the public sector needs to remain alert to the
attaché network, promotes climate action and and environmental factors.
change that can inspire other countries towards impacts from transitioning to a cleaner economy,

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 Green Finance Strategy

as our understanding in this area is enhanced by • Ask Government departments to Embedding TCFD reporting in publicly address climate change risks and opportunities as
improved data. That is why, the Government will: incorporate the updated 2018 Green Book funded financial bodies a core part of its investing. Making climate change
focus on climate risks in their policy financial disclosures in its accounts in line with
• Consider the financial risk exposures The Government recognises that as TCFD
development, including at the Spending the TCFD recommendations is a logical next step
relating to climate change and the low becomes mainstream in the private sector it is
Review; and in this process. CDC will make climate-related
carbon transition as part of the 2020 also right that publicly funded financial bodies,
Managing Fiscal Risks report; • Embed TCFD reporting in publicly funded financial disclosures in its accounts in line
such as CDC and UK Export Finance (UKEF) also with the TCFD recommendations, as soon as
financial bodies. implement the TCFD framework, as appropriate
• Undertake a review, led by HM Treasury, practicable following the close of the 2020/21
to understand the costs of achieving Our work in this area will build on an existing to their individual mandates and financial models. financial year.
net zero GHG emissions by 2050 and to framework within the public sector which has That is why:
understand where these costs will fall UK Export Finance (UKEF) is the UK’s export
already taken steps to consider the financial risks • CDC and UK Export Finance will make
across the economy; credit agency and a government department,
from climate change (Box 5). climate-related financial disclosures reporting to Ministers in the Department for
in their accounts in line with the TCFD International Trade. Its mission is to ensure that
recommendations, as soon as practicable no viable UK export fails for lack of finance or
following the close of the 2020/21 insurance from the private sector, while operating
Box 5 – Selected Government activities integrating climate-related financial financial year. at no net cost to the taxpayer. UKEF provides
risks and opportunities in decision making CDC is the UK’s development finance institution. insurance, guarantees and loans which help to
Its mission is to support the building of businesses make exports happen which might otherwise not,
• In 2018/19 we updated our guidance on the preparation of Annual Reports and Accounts
throughout Africa and South Asia, to create jobs helping UK exporters and their supply chains grow
with new reporting requirements for Climate Change Adaptation.
and make a lasting difference to people’s lives in their business overseas. UKEF has a total capacity
• HM Treasury’s Green Book provides guidance on assessing the viability and value for some of the world’s poorest places. CDC invests of £50 billion to support UK exports.
money of policies and projects across government52. The Green Book is at the leading directly by providing equity, debt, mezzanine UKEF has strong capability in the assessment
edge internationally, including when it comes to practical appraisal of climate change, finance and guarantees to businesses; and also, of project specific risks across sectors and
natural capital and other environmental effects. It also requires that the Climate Change indirectly through supporting fund managers who manages its risk profile as an export credit
Risk Assessment (CCRA) be used to account for current and future climate risks along with are aligned with its mission and who invest capital agency which assumes risks in line with the
vulnerabilities in appraising policies and projects. on its behalf. CDC invests in seven core priority needs of UK exporters on a case by case
• The National Infrastructure Commission will be examining the resilience of the UK’s sectors: infrastructure, financial institutions, basis. UKEF will further strengthen this
infrastructure, to consider what action Government should take to ensure it is resilient manufacturing, agribusiness, construction, health capability by making climate-related financial
to future changes, such as climate change53. This will build upon the NIC’s National and education.   disclosures in its accounts in line with the
Infrastructure Assessment which included recommendations on de-carbonising how the CDC established its climate change policy in 2014 TCFD recommendations, as soon as practicable
UK powers and heats its homes and deals with waste54. The Government will publish an and has made a strong commitment in its 2017- following the close of the 2020/21 financial
Infrastructure Strategy later this year in response to the NIC’s National Infrastructure 21 strategic framework to further assess and year.
Assessment.
• From 2020, the Office of National Statistics will publish comprehensive Natural Capital
Accounts for the UK to guide policy development in line with our long-term goals. This will
provide a robust metric alongside GDP to measure the sustainable growth of our economy
and highlight future priorities for public and private investment.

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Chapter 2: Financing Green

Overview Through the Clean Growth Strategy, the 25 Year

Environment Plan, and our Industrial Strategy
Transitioning the global economy to clean, we are putting in place policy frameworks
resilient and environmentally sustainable growth capable of building on this momentum to
will require investment at an unprecedented scale. deliver the transformation required. The Clean
The International Energy Agency has estimated Growth Strategy sets out how Government is
that $13.5 trillion of public and private investment investing over £2.5 billion to support low carbon
in the global energy sector alone will be required innovation from 2015 to 2021. Since the Strategy
between 2015 and 2030 to meet Paris  Agreement was published, the Government has continued
targets55. to invest in low carbon innovation, such as
The UK is a world leader in cutting emissions through the latest wave of the Industrial Strategy
while creating wealth. By legislating for a net Challenge Fund, and we now expect to invest more
zero emissions reduction target by 2050 and than £3 billion over this timeframe. This forms
preparing to put the 25 Year Environment Plan part of the largest increase in public spending on
on a statutory footing, we are responding to the UK science, research and innovation in almost
latest science and raising our ambition. Meeting 40 years.
our objectives will require increased levels of While progress to date has been strong, the
investment in green and low carbon technologies, decarbonisation of our economy requires
services and infrastructure. significant levels of investment in resilient low
Between 1990 and 2017, the UK reduced its carbon infrastructure and services. This creates
emissions by over 40 per cent while growing huge opportunities for UK business and financial
the economy by more than two thirds, the best institutions. By one estimate, the low carbon
performance in the G7 on a per person basis56. economy in the UK could grow 11 per cent per year
We have done this by taking the lead, drawing on between 2015 and 2030 – over four times faster
our existing industrial strengths in technology than the rest of the economy58.
and finance, and guided by legally binding Notwithstanding our strong starting position,
commitments to drive down emissions and we cannot afford to be complacent about the
reverse the decline in our natural capital asset barriers that will need to be overcome to scale
base. The UK clean growth sector has invested up from current investment levels to the levels
over £92 billion of public and private green required to deliver our long-term goals. Given that
investment in clean energy in the UK since 201057. much of the need for green finance will fall in less
The UK was the first country in the world developed and emerging markets, we must also
to establish a Green Investment Bank (GIB), support and drive international progress.
attracting much needed private finance to address Since 2008 the UK’s International Climate Finance
the challenge of climate change. Thanks in part has been working to catalyse green private
to the GIB, the green investment market has investment and create markets for sustainable low
improved in terms of the private sector capital carbon ventures, as well as supporting developing
available, which in turn has meant that green countries to combat and cope with the impacts of
investment has now become more mainstream. climate change and reducing deforestation.

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 Green Finance Strategy

Our Approach Establishing robust, long-term Figure 2 – Supportive policies to leverage private investment
This chapter sets out the key actions that policy frameworks
government is taking to drive the flow of green
finance both domestically and internationally. Our Solid foundations for clean and
approach recognises the need to: Power Business Energy Use
environmentally sustainable growth
• The sector has attracted • The £315 million Industrial
• Establish robust, long-term policy By hardwiring our long-term goals into legislation, more than £92 billion of Energy Transformation
frameworks; and setting clearly defined trajectories and robust investment in clean energy Fund will support
• Improve access to finance for green governance arrangements to hold governments in the UK since 2010. businesses with high energy
investment; to account for delivering on these goals, and we use transition to a low
have created a world-leading framework to ensure carbon future and cut their
• Address market barriers and build
that the UK becomes increasingly attractive for bills through increased
capability; and
green investment. This recognises the importance energy efficiency.
• Develop innovative approaches and new that investors place on long-term certainty when
ways of working. Homes • Climate Change
evaluating opportunities.
• The Heat Networks Agreements provide tax
Accelerating the flow of finance into the projects Under the Climate Change Act 2008, the UK was discounts worth over
Investment Project seeks to
and technologies that will help us deliver on the first country in the world to introduce long- £200 million a year from
leverage in around £1 billion
our objectives is a key objective for the newly term legally binding emission reduction targets. the Climate Change Levy
of private sector and other
launched Green Finance Institute, which will work The Act provided a statutory framework for to incentivise energy
investment.
in partnership with Government, financial services keeping the UK on a pathway to achieving efficiency action in 53
and key stakeholder groups. 80% reduction in emissions by 2050, guided • The Private Rented Property industrial sectors.
by five-year caps on emissions – ‘carbon EPC E Minimum Standard for
And we must ensure that we have access to up • The £18 million Industrial
budgets’ – with independent statutory oversight England and Wales has the
to date information to track our progress. We will Heat Recovery Support
by the Committee on Climate Change. The UK’s potential to attract around
develop and enhance our approach for measuring programme is designed
new target to reach net zero greenhouse gas £0.5 billion of investment.
progress on our objectives, including how best to to encourage and support
monitor flows of green finance in the UK. emissions by 2050 makes us the first major • The Clean Growth Strategy’s investments in heat
economy in the world to set such a target in aspiration of upgrading as recovery technologies
many homes as possible to in industry.
EPC Band C could require an
investment of between £35
billion and £65 billion. 

Environmental Land
Management
• £2 billion per annum is
Transport spent currently on land
management in England
• We are investing nearly
under the EU Common
£1.5 billion between April
Agricultural Policy. As we
2015 and March 2021, with
leave the EU, this money
grants available for ULEV
will be channelled into a
cars, vans, lorries, buses,
new system of payments
taxis and motorcycles, and
to reward land managers
schemes to support charge
for providing public goods,
point infrastructure at
aligned to the goals of the
homes and workplaces and
25 Year Environmental Plan.
on residential streets.

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 Green Finance Strategy

legislation. This framework, along with our we found it. The published draft Principles and
obligations under the historic Paris Climate Governance clauses set out how we will create • Publishing the Clean Air Strategy, which sets out ambitious action for achieving emissions
Agreement, embodies a robust and consistent a new Office for Environmental Protection to ceilings of key air pollutants by 2020, and 2030 from all sources, including transport,
commitment to act on climate change, and to make sure that we succeed. The new Office for industry, agriculture, and domestic sources. A key emphasis of the strategy is to target
monitor progress transparently. Environmental Protection will be empowered action to reduce public exposure to the most harmful pollutants, committing to setting a
to hold future governments and public bodies new, ambitious, long-term target to reduce people’s exposure to fine particulate matter.
The Government will bring forward the first
to account for progress, including through the
Environment Bill in over 20 years. The Bill will • Publishing a Road to Zero Strategy, setting out measures towards cleaner road transport
courts if necessary. The Bill will also commit
put environmental ambition and accountability to put the UK at the forefront of the design and manufacture of zero emission vehicles.
the Government to measuring and reporting on
at the very heart of government. It will help
progress, backed up with a regularly refreshed, • Committing public money to environmental outcomes under the Agriculture Bill. This
us make good on our commitment to leave
credible plan of environmental action. could include the protection and enhancement of our natural and working landscapes,
the natural world in a better condition than
delivering clean air and water, promoting natural resilience to climate impacts, and
encouraging tourism and wellbeing. Our new environmental land management system
will help the farming and forestry sectors grow greener by offering an improved market
Box 6 – Action to drive clean growth and environmental performance
for environmental goods and services, and thereby enable the farming sector to unlock
• Announcing two missions and further support for innovation under the Industrial Strategy’s opportunities for investment from the private sector.
Clean Growth Grand Challenge, committing to at least halve the energy use of new
• The forthcoming Energy White Paper will seek to address the challenges arising from the
buildings by 2030, and to establish the world’s first net zero carbon industrial cluster by
radical transformation of the energy system over the coming decades. It will set a vision
2040 and at least one low-carbon cluster by 2030. These missions will drive public sector
for the development of the energy system out to 2050, consistent with the Government’s
and private sector action to achieve these specific objectives and seek to develop and pilot
climate change goals, and sets out a series of actions out to 2030 that prepare the energy
solutions that can be replicated.
system for the long term. It will set out a new approach to financing nuclear and increased
• Cutting emissions and energy bills for our businesses. To understand how we can ambition on other technologies.
encourage banks and energy service companies (ESCOs) to engage in the energy efficiency
• Setting out in the Resources and Waste Strategy how we will eliminate avoidable plastic
market for small and medium sized enterprises (SMEs) we released a call for evidence
waste, double resource productivity and eliminate avoidable waste of all kinds by 2050. It
which asked whether there would be any value in a government guarantee to underpin
creates the long-term policy environment to leverage the investment needed to achieve
loans to SMEs from ESCOs, financial institutions, energy efficiency lenders and partner
our high recycling ambitions, and to further develop our domestic reprocessing and
organisations, to de-risk these products.
secondary materials markets. By showing leadership and supporting the development of
• Publishing the outcome of the Review of CCUS Delivery and Investment Frameworks by technologies and solutions that maximise the value we get from resources and minimise
the end of 2019 to support delivery of the Government’s CCUS Action Plan. The Action waste, we can achieve strategic ambitions more quickly, as well as increase the UK’s
Plan was designed to enable the first CCUS facility in the UK, to be commissioned from the competitiveness and opportunities for trade.
mid-2020s. This is a key step towards meeting our ambition of having the option to deploy
CCUS at scale during the 2030s, subject to costs coming down sufficiently.
• Agreeing sector deals in areas such as offshore wind and nuclear power – ensuring that
investors and the Government have a shared plan to deliver the investment and skills
Ratcheting up ambition A key theme of the Green Finance Taskforce was
needed to maximise UK opportunity. the importance of driving supply and demand for
Over the last year we have increased our ambition
• Committing to launch a roadmap for heat decarbonisation policy in 2020, to set out how green lending products. In publishing this strategy,
for transforming energy and environmental
we get to a long-term policy framework for decarbonising heat in the first half of the next we are:
performance in key sectors, with new policy
decade. More immediately, the Government will introduce a Future Homes Standard by • Announcing new proposals focused on
statements, sector strategies and roadmaps,
2025 to ensure new build homes are future-proofed with low carbon heating and world- driving action and investment in the
and new measures in Budget 2018 and the
leading levels of energy efficiency. We are also developing a regulatory pathway to Commercial and Non-Domestic Buildings
Chancellor’s 2019 Spring Statement.
phase out fossil fuel heating in buildings not connected to the gas grid during the 2020s. and Homes sectors.
Together, these actions will unlock significant new green finance opportunities, including Box 6 sets out some of this economy wide action
Green Mortgages for new build and potentially also new business models for retrofit. from measures to incentivise investment in Commercial and non-Domestic Buildings
energy efficiency in buildings to the development In response to a recommendation from the Green
of new markets for technologies such as offshore Finance Taskforce, the Government will work
wind and carbon capture, usage and storage with partners to determine the steps necessary
(CCUS). for landlords and businesses to understand,

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 Green Finance Strategy

and potentially disclose, their operational portfolios. We will also consider how this Public funds to leverage this money will be invested on commercial
energy use. We are currently working with the data could be made available on a live private capital terms in UK companies seeking to
Better Buildings Partnership on their Design for basis as part of updating the EPC Register commercialise promising technologies.
Performance initiative and their review on ways platform. To improve access to finance Government has
allocated substantial resources to fund investment • We are working with stakeholders,
operational performance can be measured and
• Given support for the Pay as You Save in clean energy and natural capital growth. These including in the finance sector to explore
utilised in certain new builds.
approach, we will continue to explore funds are levering in larger sums from the private the potential for a Natural Environment
The Government intends to consult on the further opportunities for simplification sector in order to achieve the overall level of Impact Fund. This could provide a mix of
future trajectory of the minimum energy and improvement of the Green Deal investment required. Our strategy recognises technical assistance and capital support
efficiency standards in the non-domestic framework to support the funding of the transformative potential of blended funding to kick-start a pipeline of commercially
private rented sector in Summer 2019. This energy efficiency measures. models and other innovative mechanisms for attractive, revenue-generative projects.
demonstrates the Government’s commitment to delivering public support.
• Sponsoring new technical standards • The £400 million Charging Infrastructure
providing landlords and businesses in the sector
(PAS 2035:2019 & PAS 2030:2019) For example, the Heat Networks Investment Investment Fund will accelerate the roll-
both time to respond and certainty. Current and
covering the end-to-end delivery of Project, provided as ‘gap funding’ to grow the out of charging infrastructure by providing
future rented sector policy is projected to be one
energy efficiency measures. The British market, aims to have a transformative impact on access to finance to companies that deliver
of the key measures in driving energy efficiency
Standards Institution published these the development of cost-effective carbon savings public charge points. The Government will
improvements through the 2020s.
standards in June. These will be embedded required to meet our future carbon reduction invest up to £200 million in the Fund, to be
Homes within the new TrustMark government commitments. In return for a public investment matched by private investors.
endorsed quality scheme, which large of £320 million, the project is aiming to lever in
In the Clean Growth Strategy, we set an aspiration • We are developing an Industrial Energy
financiers have stated will improve the around £1 billion of private and other capital by
to upgrade as many homes as possible to Energy Transformation Fund, backed by up to
investment attractiveness of energy 2021. 
Performance Certificate (EPC) Band C by 2035 £315 million of investment, to support
efficiency. It will also ensure consumers get
with fuel poor homes reaching this standard by We are also making smaller strategic investments businesses with high energy use to
what they are expecting and have suitable
2030. The total investment required to improve to pump prime new markets by funding the transition to a low carbon future and to
financial protections in place.
our housing stock to this standard is estimated development of effective project delivery models cut their bills through increased energy
between £35 billion and £65 billion. This will • Reviewing how Government energy that others can replicate with confidence. efficiency. The Government has consulted
require mobilising significant private investment efficiency data, using the National Energy For example, we are investing £5.7 million of on the design of the fund.
from new sources so, alongside the Clean Growth Efficiency Data-Framework investment to kick-start planting in the Northern • We are investigating options to increase
Strategy, we called for evidence on Building a (NEED), could be used to support Forest – an initiative which will see a minimum the size of the Public Sector Energy
Market for Energy Efficiency. The summary of innovative green finance product of 1.8 million new trees by 2022 – and will help Efficiency Loan Scheme (managed
responses to that Call for Evidence is published development. to develop and test approaches that will lay the by Salix Finance). This approach will
alongside this document. foundations for the National Forest Partnership to be outlined in a roadmap for the public
Based on the responses to this Call for Evidence Improving access to finance achieve their longer-term ambition of 50 million sector later in 2019 along with other key
and the recommendations of the Green Finance trees planted over the next 25 years59. policies and programmes required to
Taskforce we intend to take action that will for green investment meet the ambitions of the Clean Growth
Building on this experience, we are expanding
build the market for green finance products to Long term policies and increased ambition have our portfolio of blended, innovative funds to Strategy. The scheme the has funded over
support home energy efficiency. These actions sharpened the incentives for investment from the ensure that public investment acts as a catalyst, 17,000 projects, enabling public sector
include: private sector. Our strategy recognises the need increasing access to finance for promising new organisations to reduce their bills, with
for additional government support to overcome technologies and investment models: savings recycled into a dedicated fund for
• Publishing a consultation later this year
investment hurdles in certain sectors. This reinvestment. The scheme is estimated to
on the merits of setting requirements for • A new clean growth venture capital fund
includes: deliver £1.4 billion (undiscounted) of
lenders to help households improve energy will be launched with a £20 million capital public sector bill savings over the period
performance of homes they lend to. • The provision of carefully designed public contribution from the Department for 2018-2032 and projects are estimated
• Publishing an update to the EPC data support to leverage private capital; and Business, Energy and Industrial Strategy to reduce greenhouse gas emissions
available through open data, and a • Measures to unlock new revenue streams (BEIS), with a view to attracting a matching by 1 MtCO2e over the fifth carbon
commitment to update this at least every in areas such as natural capital, carbon or potentially greater capital sum from the budget period (2028-2032)60.
six months, to support lenders in driving finance and resilience. private sector. In addition to catalysing
energy efficiency by evaluating the EPC the Clean Growth equity financing market,
performance of their lending

40 41
 Green Finance Strategy

• The Government will create the UK Shared By enabling the long-term planning of habitat
Prosperity Fund (UKSPF), a programme of creation, improving opportunities to find suitable
investment to tackle inequalities between land and enabling trade in habitat units, these new
communities by raising productivity, policies have the potential to open up the field
following our departure from the European of habitat creation to a wider suite of potential
Union. The UKSPF will invest in the investors and to remove some existing barriers to
foundations of productivity as set out in investment in natural capital.
our Industrial Strategy to support people
Expanding Carbon Finance
to benefit from economic prosperity,
especially in those parts of the UK whose Carbon finance also offers a revenue stream
economies are furthest behind. for investors, by giving value to the greenhouse
gas emissions that are reduced or removed by
Unlocking new revenue streams a project. The Chancellor announced a package
of funding for forestry in the 2018 Budget,
Whilst there is a clear role for government to act
including a Woodland Carbon Guarantee, which
as a cornerstone investor, it is equally important
will underwrite £50 million of carbon credits
that green projects are able to develop new
from forestry. In the 2019 Spring Statement, the
revenue streams that provide rewards for the
Chancellor further announced a Call for Evidence
environmental benefits they deliver.
that would explore whether travel providers
We are taking action to do this by developing should be required to offer carbon ‘offsets’ to
new approaches to financing natural habitats, their customers. Such a requirement could create
expanding carbon finance, enhancing resilience a new source of demand for carbon offsets, one
and reforming regulatory frameworks. form of carbon finance.
Financing natural habitats The UK has led the way in developing robust
The Government has committed to introducing standards for offsetting, including the Woodland
mandatory biodiversity net gain for developments Carbon Code which provides a robust basis for
in England as part of its longer-term ambition to terrestrial carbon offsetting. Our Peatland Code
embed a ‘net environmental gain’ principle for strongly supports corporate social responsibility
development. Biodiversity net gain describes an investments and has good potential to support
innovative approach to development that aims to offsetting in the future. These standards have
leave the natural environment in a measurably helped a growing number of businesses invest in
better state for wildlife than beforehand. While carbon reductions with confidence.
the focus of biodiversity net gain is on avoiding The Government will consider how to further
negative impacts and encouraging improvements deepen the links between public and private
for wildlife within development sites themselves, it sector initiatives to mobilise and spend carbon
also offers potential to stimulate the development finance. For example, we will explore the scope
of markets in off-site compensation and habitat for further private sector engagement in REDD+
banks. Habitat banking enables many small (Reducing Emissions From Deforestation and
developer contributions to be aggregated for Degradation), a key pillar of the international
investment in larger scale green infrastructure. framework for investment in nature-based
Alongside biodiversity net gain, Natural England is solutions. We are committed to further supporting
rolling out district-level licensing for developments the development of robust offset standards,
that impact great crested newts. District-level including the development of methods for
licensing enables developers to fund off-site accounting for marine carbon offsets, to increase
compensatory habitats for protected species the opportunities for investment in nature-based
that are affected by development. This changes solutions to climate change.
a system designed to ensure simple compliance Enhancing Resilience
into one that delivers positive environmental
The frequency of destructive weather events,
improvement, funded by developers. 
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 Green Finance Strategy

in particular flooding and coastal erosion, is development and uptake of low impact packaging Driving financing opportunities in low in this way will ensure that decisions made
likely to grow. This year the Department for solutions and the commercial rewards of investing carbon and resilient infrastructure about the UK’s future infrastructure needs
Environment, Food and Rural Affairs (Defra) has in sustainable product design and more durable take into account, in a consistent way, not
consulted on the scope for new local funding products. Our intention is to legislate by 2021 and We will showcase green investment opportunities only the technological future but also the
mechanisms to generate revenue streams to back to have reforms operational by 2023. and drive the demand for and development of future climate.
investment in reducing these risks and on the UK’s resilient, investment-ready projects:
In the water sector, some public utilities are • BEIS will be supported by the Infrastructure
infrastructure requirements for climate resilience • We recognise significant investment is
working with regulators to deliver environmental and Projects Authority to seek to apply a
and flood risk management. Later this year Flood required in low carbon infrastructure in
objectives in a different way. For example, by green filter to the National Infrastructure
Re, one of the world’s biggest and most innovative the UK to deliver our carbon budgets.
paying farmers and landowners to modify their and Construction Pipeline.
natural hazard re-insurance programmes, which The government’s ongoing Infrastructure
land uses the overall pollutant burden in a
is designed to ensure householders in high flood Finance Review explores how government • The Government recognises the
catchment can be reduced. By offsetting in this
risk areas can access affordable insurance, will can continue to ensure that good importance of investing in natural capital
way pollutant load targets for catchment areas
complete its first scheme review. Following infrastructure projects can raise the to create great places for people to live
can be met at a far lower cost than equivalent
consideration of this report and the recent finance they need, particularly in the light and work. This is why Government is
action through investment in conventional water
consultations, government will publish a new of technological change, the changing working closely with local stakeholders
treatment infrastructure. Nature-based solutions
policy statement in 2019, including the role of nature of our relationship with the and investors involved in development in
to protecting water supplies, reducing pollution
complementary finance sources, local funding European Investment Bank, and the need the Oxford Cambridge Arc. Embedding
and addressing flood and drought resilience also
mechanisms and the ongoing Flood Re scheme. for infrastructure that is resilient to climate natural capital into major new development
deliver valuable benefits for carbon sequestration,
change and required to deliver our fourth at the outset will help to maximise the
National and international standards bodies biodiversity and wider social objectives.
and fifth carbon budgets. This review will opportunities for nature-based solutions
(BSI and the International Organisation
One currently operating scheme, which was inform both the 2019 Spending Review and to climate change and flood resilience,
for Standardisation (ISO) respectively) are
set up primarily to address pollution, has been the National Infrastructure Strategy. create great places for people and attract
additionally exploring the role of standards
forecast by the utility concerned to deliver savings investment. It can help improve strategic
in climate change adaptation. By providing • As discussed in Chapter 1, the National
of over £100 million for bill payers together planning and decision-making, achieving
rigorous and consistent approaches to adaptation Infrastructure Commission (NIC) is carrying
with a range of additional benefits62. These better environmental outcomes.
decision making, standardisation offers improved out a study, to understand the current and
initiatives, demonstrated in connection with water
confidence and transparency in order to leverage future resilience of UK infrastructure. This • The benefits of investing in green
management, are scalable and transferable more
investment in resilience activities. The first will develop a framework for assessing infrastructure are clear, with increasing
widely. Government will work with the water
international adaptation standard, ISO 14090: resilience and making recommendations to evidence that spending time in nature can
industry and regulators to identify barriers to
Adaptation to climate change — Principles, government that can be used in the next bring health and well-being benefits (see
the further development of this model and its
requirements and guidelines, was published earlier National Infrastructure Assessment, which Future Parks Accelerator Case Study). The
adoption in other areas.
this year with further standards in the process of is required by HM Treasury every five Government wants to encourage more
being developed61. years. Integrating climate considerations investment, and as a first step we will be

Reforming regulatory frameworks Addressing market barriers

Government recognises that driving investment and building capability Case Study: Future Parks Accelerator
at the scale required to meet some of our long- We recognise that even with long-term policy in In February 2019 the Secretary of State for Housing, Communities and Local Government
term goals requires different approaches to place, and bold and ambitious commitments to announced an investment of £1.2 million into the Future Parks Accelerator programme. Future
regulation. For example, in our Resources and provide access to finance, there are also market Parks Accelerator is a joint National Lottery Heritage Fund and National Trust programme to
Waste Strategy we have committed to reforming frictions that can prevent the flow of private support 8 local authority areas to transform their parks estates, testing and learning from new
the current packaging producer responsibility sector finance from supporting our clean growth and innovative models of parks management and funding to create more sustainable parks estates
system. This includes adopting the ‘polluter pays’ and environmental ambitions. for the future. The learning from the programme will be shared widely to help local authorities to
principle so that producers of packaging cover develop sustainable plans for their parks estates.
We are taking action to drive financing
the full net cost of managing their packaging at
opportunities in low carbon and resilient Newcastle City Council has blazed a trail for the Future Parks Accelerator programme; they
end-of-life, compared with less than 10% of the
infrastructure, support local green finance action have undergone a pioneering journey to set up a Parks and Allotments Trust and in April 2019
costs of managing household waste under current
and to reduce transaction costs. transferred their parks and green spaces estate to the Trust on a long lease. During their journey,
legislation. This will increase the incentives
for supply chain innovation, accelerating the Newcastle City Council have gathered significant learning and developed key documents which
will be of value to many other local authorities. The Government has invested £210,000 to help
Newcastle to collate and disseminate their learning with other areas.

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 Green Finance Strategy

setting out what ‘good’ green infrastructure with local authorities, for example through the support a pipeline of low-carbon projects aggregated into a single capital raising
looks like. Natural England has commenced Manchester IGNITION project, to find innovative (using the energy strategies as a basis prospectus to unlock private finance.
a project to define a framework of green funding and financing solutions to pay for for their work) and a suite of supporting
• In Cumbria, Nestle and other partners
infrastructure standards to assist local resilience measures, which could be adopted more toolkits and guidance.
are pioneering the Landscape Enterprise
authorities to audit and plan for green widely. These approaches will inform new ways
• We are also transferring the £10 million Network (LENS) approach. This requires
infrastructure in their area. This will also local stakeholders can raise the funding they need
Rural Community Energy Fund to the hubs an understanding of stakeholders within
inform work by government to develop to manage local risks.
to support communities to develop local the landscape and their reliance on natural
national planning policy and guidance
projects. capital assets, such as soil, water or
and better ways of measuring changes in Sharing local best practice woodland. By first identifying the market,
green infrastructure in order to encourage • In January 2019, the Government and
Delivering the required transformation means the LENS approach starts with potential
investment. UK100 delivered the first Investing in Local
building on the existing pockets of good practice sources of investment, which could be
Energy conference. The conference, held
including those described above so that all a range of local stakeholders including
Supporting local green finance action communities can access the finance that they
in Leeds, brought together leading green
water utilities, local and multinational
finance experts and investors and some of
The Green Finance Taskforce also highlighted the need. Ultimately this depends on strong local businesses, employers and householders.
the UK’s largest companies and town hall
important role of local actors in guiding potential leadership, but central government can play a When combined with tools such as reverse
leaders from across the country to discuss
investors towards opportunities that meet local clear role. That is why the Government is taking auction this could provide an efficient
how to unlock at least £2 billion to help
priorities, and therefore stand a good chance action, including supporting the rollout of local mechanism for multi-stakeholder landscape
support clean local energy projects as part
of securing backing from local communities strategies for unlocking additional investment: investment.
of the Industrial Strategy.
and decisions makers. Often there is a lack of
• Through the Heat Networks Delivery Unit, In order to drive the reduction of transaction
the resources and skills needed to develop a • We are supporting the Ecosystems
we are supporting local authorities through costs, in March 2019, the Government launched
pipeline of projects sufficient to unlock investment Knowledge Network to bring together local
the early stages of project development. the Boosting Access for SMEs to Energy Efficiency
opportunities in local areas, and investment-ready natural capital champions to engage with
• The Local Energy programme is designed (BASEE) competition. The competition will
project proposals are in short supply. national partners and potential investors
to start to build the capacity and capability provide £6 million of funding to accelerate the
through a Natural Capital Investment
Innovative projects such as those showcased growth of the energy services market for small
at local levels to deliver integrated clean Forum.
below (see Natural Capital Pioneers Case Study) and SMEs by driving down transaction costs
growth solutions. To date the Government
have shown that with the right leadership and and promoting third party investment in energy
has invested £10 million in the Programme. Reducing transaction costs
the application of suitable skills and resource this efficiency projects. The funding will be available
This includes funding for all 38 Local
barrier can be overcome. Novelty and uncertainty add to the costs of for new innovative scalable business models or
Enterprise Partnerships to write their own
project proposals and reduce the chances of solutions that reduce costs, simplify processes
The Environment Agency is working closely energy strategies, five local energy hubs to
attracting funding. In the previous section, we and encourage take up of energy efficiency by
noted the successful models that are being tested SMEs at scale.
in some areas and the support that Government
Case Study: Natural Capital Pioneers Programme is providing to enable these models to mature and
The IGNITION project, led by Greater Manchester Combined Authority with support from the be replicated on a larger scale. Developing innovative
DEFRA ‘Pioneers’ Programme, has shown how local governments can access green finance for In addition, the size and volume of projects at a approaches and new ways
natural capital investment and identify pipeline project opportunities for investors. The project
has built a knowledge base of resources around contracting and investment approaches that
local and regional level often prohibit securing of working 
large scale financing. Many of the solutions
will enable investment in nature-based solutions to be scaled in city regions across Europe. The required are by nature small scale both for The Government can also play an important
first investment opportunity within IGNITION will enable investors to share the financial rewards those seeking to secure decarbonisation and role working with others to develop innovative
from investing in sustainable urban drainage solutions, to deliver substantial reductions in public environmental outcomes. approaches to accelerating green investment
institutions’ water and sewerage bills. and demonstrating the success of low carbon,
We welcome the action by local authorities and resilience and natural capital investments and
Pioneer programmes in North Devon and Suffolk have highlighted the benefits gained from the the private sector on these issues: associated benefits. This includes catalysing
sea and options for translating this into revenue generative investments. These include restoring
• The City Leap Project, led by Bristol public-private sector collaboration and exploring
fish stocks and improving fishing infrastructure, boosting sustainable tourism, increasing the
City Council, has demonstrated how new ways of working, for example, with regard to
impact of water quality schemes, increasing the positive effects of blue carbon on the climate and
large volumes of small projects can be Government procurement.
of biodiversity on human health and wellbeing. In North Devon, lead project partner WWF will pilot
two promising models for structuring this type of investment during the current financial year.

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 Green Finance Strategy

Public-Private sector collaboration  Systems Catapult (ESC) and Cabinet Office. retrofitting existing buildings to the same affordable, clean energy. Different economies
MEP’s mission is to enhance the capability energy standards as new buildings by will face varying challenges, and the UK is
A key theme of our Green Finance Strategy is
in energy managers and associated 2030. The £10 million grant funding will be working through its strong partnerships and
public-private sector collaboration. Bringing
decision makers to come together with awarded to projects that can demonstrate the Official Development Assistance portfolio
together the investor community with policy
supply chain experts (including investors) cost reductions by carrying out deep to overcome hurdles and accelerate action.
makers and project developers can help to
to develop and design, finance, procure, retrofit at scale on a large number of Public sector funding is particularly crucial in
develop innovative and shared approaches to
build and operate cost-effective integrated similar properties. The funded projects will accelerating climate action in difficult to reach
address finance challenges in key sectors. The
energy solutions. The project is mobilising need to consider both process related and areas like adaptation and resilience. But public
GFI has been created, in part, to lead some of this
the public sector to use its own sites as material innovations, by focusing on mass sector funding alone is insufficient to meet the
work.
a pathfinder to attract investment and production and large-scale delivery. investment needed for the global transition
• The Green Finance Institute will launch stimulate innovation. to environmentally sustainable growth. Public
a series of mission-led coalitions that interventions must therefore focus on mobilising
will convene multi stakeholder groups to
• The pilot phase of MEP finished in March Driving International Green private finance and removing market barriers to
2019, and the project has successfully
address the barriers to greater and more
been awarded £20 million to support Investment such investment.
rapid deployment of green capital. These
phase two. The project will grow private At least $6 trillion per annum of new or The Government is committed to helping
projects will help to accelerate private
sector expertise in cutting-edge smart, reallocated infrastructure investment up to developing countries in this global transition,
investment in the Government’s Clean
integrated energy efficiency solutions that 2030 will be required to meet the Paris Agreement, including through the shared developed country
Growth Strategy and 25 Year Environment
combine low carbon generation, storage and the wider Sustainable Development goal of mobilising $100 billion per year in climate
Plan through tangible actions that will
and energy demand management, to Goals64, 65. While this is a major challenge, finance from public and private sources by 2020
unlock supply and demand and encourage
benefit both individual sites and the wider it also presents significant economic opportunities.  and through to 2025. The UK has committed
green investment.
energy system. Up to £14 million will be to spend at least £5.8 billion of International
This huge investment and economic opportunity
The Government will this year publish its Clean used to implement sophisticated energy Climate Finance between 2016 and 2020. This
will drive the transformation of the global
Maritime Plan. As the global transition to zero upgrades at up to eight sites, with designs builds on the £3.87 billion that the UK spent on
economy to be environmentally sustainable,
emission shipping gathers pace over the coming for up to 36 additional public sector sites climate activities between 2011 and 201566. These
resilient, and prosperous for all. It includes
years, driven by increasing international pressure completed by the end of March 2021. funds have thus far produced outcomes in key
decarbonising industry and transport, building
to tackle emissions of greenhouse gases and air areas including forestry and land use, industrial
• The Greening Government Commitments smart energy systems and increasing access to
quality pollutants, the UK has the opportunity to decarbonisation, and energy transitions (Figure 3).
(GGS)63 also demonstrate Government’s
build on its existing position as a world leading
leadership in improving the environmental
financial centre to become the global hub for the
sustainability of its own estate. Specific
provision of green finance for the clean maritime Figure 3 – 2018 UK Climate Finance Results67
targets are set for reducing emissions,
sector. 
waste and water, and for improving
• To capitalise on this opportunity, the sustainable procurement. The value of
Government will launch a ‘Financing overall saving from reduced energy use,
Green/Greening Finance for Maritime’ waste arisings and water consumption
initiative at London International are estimated at £150 million in 2017/18
Shipping Week. This will have a compared to the 2009/10 baseline.
dual approach, both providing information Following the achievements reported 590 MW 17 million 10.4 million
Clean energy People provided with Avoided or reduced tonnes
to industry about zero-emission funding under the GGCs across government so far,
capacity installed improved access toclean ofGHG emmisions
opportunities, while also promoting a commitment to making further progress energy
opportunities in clean maritime to potential beyond 2020 has been maintained,
investors. demonstrating a commitment to leadership
in this area.
Exploring new ways of working • The BEIS Whole House Retrofit competition
We are also using our innovation funding to is a key step towards accelerating a
support new ways of working and to foster new reduction in domestic retrofit costs. The
approaches in the private and public sectors: competition supports the Clean Growth 47 million £3.3 billion £910 million
Grand Challenge, in particular the Buildings People supportedto cope Public financemobilised Private financemobilised
• Modern Energy Partners (MEP) is a withclimate change forclimate change for climate change
collaboration between BEIS, the Energy Mission, which aims to halve the cost of

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 Green Finance Strategy

By sharing skills and expertise the UK assists Improving access to finance for green
governments to develop the policy frameworks investment
to enable private investment, and help businesses
design strong projects to access finance.  We also UK finance has been used in a range of innovative
use strategic public investment and innovative ways to help communities and businesses
financing instruments to leverage private access finance. For example, in Sub-Saharan
finance and break down market barriers to Africa, the Government funded Renewable
investment.  Across Government we have a Energy Performance Platform (REPP, £148
number of country focused programmes to help million) supports small and medium sized project
develop green finance markets, including UK developers by providing technical project
Partnering for Accelerated Climate Transitions development advice and early stage finance.
(UK PACT) and the Prosperity Fund. Examples As the scale of this support grows so too does
are outlined in Annex A. This is supported by the momentum behind these renewable energy
our work to transform domestic, international and markets, attracting private and institutional
multilateral institutions, as well as institutional investors. Through the Global Climate Partnership
investors, to make green finance part of their core Fund (GCPF, £55 million investment), the
business. Government is using its finance to lessen risk
and attract funds to support local financial
Establishing robust, long-term policy institutions in 25 countries. GCPF provides these
frameworks institutions with technical and financial support to
provide green loans at commercial rates. This is
Responding to the needs and priorities of stimulating a market for these debt products with
developing countries, the Government is 34 local financial institutions making 74,000 loans
marshalling its’ expertise to design regulatory to SME and household clients by 201869.
and market frameworks that are opening up
stable enabling environments for investment. Limited access to insurance also restricts
For example, our Global Energy Transfer Feed-in investment and damages the resilience of
Tariff (GET FiT) programme has supported the communities and economies. An estimated $163
development of small-scale on-grid renewable billion of assets are underinsured in the world
energy projects in Uganda by working on feed in today, with emerging economies accounting
tariffs and with government. By working closely for $160 billion (96%) of the global total70.
with the energy regulator and the Government of The Government is supporting alternatives to
Uganda, this has delivered 87MW of renewable traditional insurance to address this barrier, for
power generation68- creating jobs, reducing instance: Global Parametrics is a UK funded and
emissions and providing a major boost to the based social enterprise to strengthen resilience
country’s total power generation capacity making to natural disasters in developing countries. The
greater access to energy for Ugandans. The company uses cutting-edge climatic, seismic and
regulator is now highly skilled and able to continue financial risk modelling to design products that
the work on its own. provide financial protection to organisations
operating in developing countries. 
The UK is supporting countries to ensure they
are mobilising private finance to be resilient to Furthermore, the Centre for Environment,
climate shocks. In July 2017, the Prime Minister Fisheries and Aquaculture Science (Cefas) is
launched the UK-led Centre for Global Disaster working to improve the climate resilience of Small
Protection. This £33 million programme draws Island Developing States (SIDS).  Ecosystem-based
upon UK and global expertise in risk, finance and insurance products are being explored to address
insurance to design and support disaster risk unsustainable state debt accumulation as a result
financing systems, helping developing countries of extreme weather events, by facilitating access
put financing and plans in place before disaster to funds for restoration or as compensation to
strikes.   fishermen. Both of these goals aim to rehabilitate

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the protective and livelihood-related functions The UK has contributed £720 million to the Green restoration and promoted long-term conservation The UK has been a strong supporter of action
of ecosystems. For instance, coastal ecosystems Climate Fund (GCF) to date and is one of the through global commodity markets. Furthermore, under the Montreal Protocol to tackle fluorinated
such as coral reefs, mangroves and seagrass leading contributors to the Global Environment P4F’s first successful partnership, a sustainable gasses that damage the ozone layer. Building on
beds, can provide storm protection for coastal Facility (GEF), having committed £250 million rubber production initiative, has mobilised £68.4 these efforts we are working with international
communities, while supplying benefits for fisheries for 2018-2022. Since 2015, the GCF has become million of private investment and brought 88,000 partners to deliver an early switch from
and tourism.  the world’s largest dedicated climate fund hectares under improved sustainable land use technologies that use other fluorinated gasses
and the key multilateral fund for supporting management76. which are powerful greenhouse gasses. This
The UK’s climate finance is leveraging private
implementation of the Paris Agreement. It has includes the Kigali Cooling Efficiency Programme
investment; attracting institutional investors Moreover, the UK is making targeted investments
committed $5 billion across 102 projects to date, which is designed to mobilise private investment
and taking advantage of the expertise of the to support innovative financing for emerging
while leveraging over $12.6 billion in co-financing71. into energy efficient cooling technologies.
City of London. This combined approach offers sectors, such as Blue Carbon. The Government
The UK has been a strong advocate of the GCF
huge potential to mobilise green finance.  recently announced £12.75 million to fund The Government also promotes low carbon
doing more to mobilise private sector finance;
The Government uses its funds to kickstart mangrove restoration, which will support projects growth through CDC, the UK’s Development
pushing successfully for the establishment of a
markets; help projects reach financial close and in Small Island Developing States, and those Finance Institution. CDC invests across Africa
dedicated Private Sector Facility to work directly
demonstrate profitability, reduce risk perceptions with high rates of deforestation. The program and South Asia to promote the transition to
with the private sector.
and improve the cost of capital. For instance, will mobilise strategic public and private sector low carbon growth and offers support to the
UK funds are being used in the Sustainable The UK is also a founding member of the Climate investments in the Blue Carbon sector, with a companies it invests in to become climate smart.
Infrastructure Programme (SIP) in Brazil, Investment Funds (CIFs) and is the largest focus on developing incentive-based instruments In the past two years they have committed
Colombia, Mexico and Peru (SIP Latin America, contributor, investing over $2.5 billion since including technical cooperation grants, loans, high- over $500 million in clean power generation,
£177.5m). They accelerate the implementation of 200872. Over the coming years, the CIFs will have risk investment grants and equity. £20 million of including founding the renewable energy
national green development plans by catalysing allocated over $8 billion to projects that reduce junior capital has also been committed to the Eco platform Ayana to develop utility scale solar
private sector investments into low carbon emissions; support clean growth; build climate Business Fund (EBF). This is an impact investment and wind generation projects across India, and
infrastructure.  resilience and protect forests across more than fund, lending throughout Latin America and the supporting off-grid solar power company M-KOPA
70 developing countries73, 74. At over $5 billion, the Caribbean, promoting environmentally responsible to provide 90 million hours of kerosene-free
Addressing market barriers and Clean Technology Fund (CTF) is the largest of its business in the Fund’s four focus areas of lighting a month, to 750,000 households across
building capability programmes and focuses on the deployment of agriculture and agri-processing, fisheries and East Africa77. Also, through the UK Climate
clean technologies to reduce the greenhouse gas aquaculture, forestry, and sustainable tourism. Investments (UKCI) the UK is mandated to invest
Our climate finance is responsive to market
emissions of developing economies. Investments EBF is demonstrating a commercially viable £200 million in green projects across Sub-
barriers and the needs of developing countries.
are designed to help push new technologies financing model which leverages private sector Saharan Africa and India on commercial terms.
The UK Government is building strong
over the ‘tipping point’ so that they no longer capital whilst complementing this with a strong This fund is designed to mobilise private sector
partnerships with countries including China,
require concessional finance and can instead technical assistance arm to both beneficiaries finance to scale up renewable energy and energy
Mexico and Colombia, to deliver technical support.
be supported by the market. The CTF has an and financial institutions. The fund will drive efficiency projects and demonstrate that low-
For example, the £60 million UK PACT programme
impressive track record: its dedicated private transformational change through embedding carbon investments can be profitable.
works closely with governments to develop
sector windows have on average mobilised £7 environmentally sustainable lending practices
the enabling environment for investment. This
from investment partners for every £1 of CTF within partner financial institutions.
includes projects progressing local green finance
finance spent; with around a third of the
taxonomies and supporting climate related asset
co-financing coming from the private sector75.
disclosure and transparency. UK PACT will expand
into other geographies and sectors in the coming
Developing innovative approaches and
years.
new ways of working
Multilateral investment is a key tool for building
Where there is a limited range of financial
capability to gain and deliver investment
instruments available to deliver green
scale in countries; these funds have well-
investments, particularly in more challenging
developed pipelines, can deliver at scale, and
markets such as forest commodities, the
are producing results. The UK has been one
Government promotes innovation using its climate
of the largest contributors to multilateral
finance. For example, the UK’s Partnerships
funds financing the green economy, and we work
for Forests (P4F) programme, working with Lestari
to focus fund investments where they can play a
Capital, helped to incubate the new Sustainable
full role as a lender of last resort and maximize
Commodities Conservation Mechanism. This
private sector mobilisation. 
helped to meet demand for forest protection and
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Chapter 3: Capturing the Opportunity

Overview The UK as the global hub for

Demand for green finance from consumers, green finance
investors, and governments is expected to grow
The government is committed to ensuring the
substantially over the coming decades. A report
UK continues to be at the forefront of the global
from Ricardo Energy & Environment, prepared
green finance market, building on its strengths as
for the UK Committee on Climate Change,
a global financial centre:
estimated that the potential global market size
for low carbon financial services could reach • The UK is the largest centre for asset
£280 billion per year in 2030 and £460 billion in management and insurance sectors in
205078. With strengths across the full financial Europe, with an asset management sector
services spectrum, deep pools of capital, and a managing £9.1 trillion of assets79 and an
leading track-record on environmental policies, insurance sector generating $220 billion in
the UK is uniquely placed to capitalise on this premiums in 201780.
opportunity and strengthen its position at the • UK banking sector assets are the largest
forefront of this market. This chapter sets out how in Europe and the UK is a world-leader in
the Government, working in partnership with the cross-border bank lending, with a global
newly launched Green Finance Institute (GFI), will market share of 18% in 201781.
look to support the private sector in the delivery
of this ambition. Our strategy for doing this has • These sectoral strengths are underpinned
three core elements: by a reliable and longstanding professional
services sector. The legal services sector
• Consolidating the UK’s position as
alone is the largest in Europe and second
a global hub for green finance – the
largest globally, while the UK also enjoys a
Government is committed to maintaining
leading accounting sector with net exports
the UK’s leading position as a global
of £2.5 billion in 201782.
financial centre for green finance. We will
do this by coordinating UK activities behind • The UK benefits from access to global
a shared strategic direction, in partnership capital pools, a central time zone, and a
with the GFI, and establishing the global stock exchange which hosts one of the
market for green finance; world’s most international capital markets,
with roughly 500 international companies
• Positioning the UK at the forefront of
listed from more than 70 countries83.
green financial innovation, and data
and analytics – the Government will As the Chancellor set out in his annual Mansion
create an environment that catalyses UK House speech in June 2018, this enduring strength
innovation in green finance products and in financial services has been built on three
services, including data and analytics, in pillars: innovation, resilience and openness. This
collaboration with regulators, industry, and combination provides the foundation for long-
academia; and term success, and ensures the UK has a world-
leading position in the markets of the future,
• Building capabilities and skills on green
including in the green finance market.
finance – the Government recognises
the need to upskill finance professionals
and government officials and promote
awareness in civil society to unlock the full
potential of green finance.
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Creating a strategic focus for UK Establishing the global market for Local green finance markets around the world develop new ideas, including in areas such as
green finance green finance will play a significant contribution to tackling fintech, alternative finance, and big data, provides
climate change and there is a need for them to a key opportunity for UK firms to first innovate
As consideration of environmental risks and Climate change is a global issue that requires a be developed in order to provide local currency and then mainstream green products and services.
opportunities becomes more deeply embedded global response. The world’s greatest emissions finance and investments. The Government
into the financial mainstream, the Government is reductions potential is in emerging markets while There have already been important advances in
recognises this and is committed to supporting
taking action to cement UK leadership in green the greatest need for adaptation finance is in UK green finance activity across sectors of the
the development of local green finance, as
finance. We recognise the need for a permanent some of the least developed countries. industry, often supported by public sector policy.
outlined in Chapter 2. The UK government is, for
and co-ordinated effort to ensure the UK can For example:
The Government is committed to establishing instance, promoting low carbon development and
continue to capitalise on the opportunities affordable, clean energy through the Prosperity • Asset managers are increasingly taking
green finance markets worldwide. Working closely
presented by the burgeoning green finance Fund and UK Partnering for Accelerated Climate an interest in investing in companies that
with the GFI, we will take a coordinated approach
market. That is why, building on the work of the Transitions (UK PACT) (see Annex A). take environmental, social and governance
that captures and aligns the diplomatic routes
Green Finance Initiative, we are: (ESG) factors into account, while green
through which the UK engages with key markets In building green finance markets, there is a
• Launching the new Green Finance on green finance, drawing upon the Government’s venture capital funds are growing;
growing demand for expertise from the private
Institute to strengthen public and private networks of financial services attaches in the sector, governments and regulators, and a • The London Stock Exchange Group
sector collaboration and cement the UK’s Foreign and Commonwealth Office and the need for cross-sector collaboration. The UK (LSEG) has taken a leading role in driving
position as a global hub for green finance. Department for International Trade. will maintain strong commercial and diplomatic innovation, both in providing a platform for
partnerships with key green finance markets, with products and delivering on new financial
the aim of sharing best practice and increasing products, from ESG Exchange Traded
Box 7 - The Green Finance Institute – building partnerships to accelerate cross border flows of green capital. Funds, Yieldcos and green bonds, to
green finance sustainability and ESG indexes for passive
The private sector has already been instrumental
investors to track (e.g. FTSE Russell), as
The GFI, launched on 2nd of July 2019 at the Green Finance Summit, is a response to the first in driving forward this agenda through the City
shown in below Case Study;
recommendation of the Green Finance Taskforce report and is led by Chairman, Sir Roger Gifford, of London’s Green Finance Initiative, which has
senior banker at SEB and former Lord Mayor of the City of London, and CEO, Dr Rhian-Mari Thomas already hosted three successful international • Insurers and pension trustees are
OBE, former Barclays executive. Green Finance Summits to galvanise action. The increasingly seeking to understand the
Initiative is helping the UK build formal business- financial risks and opportunities arising
Supported by £2 million of seed funding from the UK Government and £2 million from the City of from climate change, with government
to-business partnerships with Brazil, China, India,
London, the GFI’s overarching mission is to accelerate the domestic and global transition to a clean, supporting this through pensions
and Mexico (see Figure 4) – key partners for
resilient and environmentally sustainable economy through accelerating UK leadership in green regulations (see Chapter 1) and initiatives
UK exports of financial services. These private
finance. to strengthen resilience to climate change
sector partnerships aim to deepen ties with the
As the UK’s principal forum for public and private collaboration on green finance, the GFI will foster UK on green finance, driving innovation and and natural disasters (e.g. Flood Re84;
greater alignment of public and private sector initiatives, create commercial opportunities for UK scaling-up green cross-border capital flows (e.g. Centre for Global Disaster Protection85);
finance providers, and strengthen the competitiveness of the UK financial services sector and the UK’s UK-China Green Finance taskforce; see Chapter • Banks are launching green mortgage
global green finance brand. 1). Going forward the GFI will play a central role in products and expanding the corporate
The Green Finance Institute will focus on four specific areas: strengthening these partnerships and encouraging green loan market;
UK financial and professional services to engage
• Catalysing finance to accelerate the economic transition through convening both sector- with other financial centres on green finance. • In the retail space, consumers are
focused and place-based mission-led coalitions to unlock the barriers to the deployment of increasingly driving the need for innovative
capital; financial products that allow them to
• Supporting the greening of the financial system through close collaboration with financial
Driving innovation in green invest in line with ESG principles through
regulators and policy-makers; finance crowdfunding and retail investment
platforms; and
• Building UK capacity on green finance, including providing an accessible, digital platform The challenges posed by climate change and
• Finally, all of the above is creating
to collate resources and share and showcase developments across all aspects of UK green environmental concerns affect all areas of the
opportunities for the wider professional
finance; and UK economy and offer important opportunities.
services ecosystem, whether legal services
• Driving the global green finance agenda through international Increased demand for green and climate-
for Corporate Power Purchase Agreements,
dialogue, partnerships and trade. resilient investments will drive the supply of new
or accountants, actuaries and sustainability
innovative products. The UK’s reputation for
consultants supporting the implementation
financial innovation and its ability to create and
of the TCFD recommendations.
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Figure 4 – UK’s climate investments and green finance partnerships

China:
Through the Economic and Financial Dialogue, the UK
and China have recognised each other as partners of
choice on Green Finance. The joint UK-China Green
Finance Taskforce has delivered on a TCFD pilot
scheme and increased collaboration on green finance.
UK PACT is building capability in areas including
climate risk disclosure and greening Belt and Road
investments.
Mexico and Colombia:
UK PACT is building partnerships
with governments, and the Green
Finance Initiative has agreed a
partnership with Mexico’s Green
Finance Advisory Council.

Brazil:
The Green Finance Initiative has
agreed a partnership with the Brazil
Council for Sustainable Market
Development. UK Climate Finance
is combatting deforestation and
accelerating investment in sustainable
infrastructure, while the Prosperity
Fund develops the green finance
sector and innovation in green capital
market instruments. The UK and Brazil
collaborate on green finance through
the Economic and Financial Dialogue.
India:
The Green Finance Initiative is
working on developing a partnership
with the Federal Indian Chambers
of Commerce & Industry, and the
International Climate Finance activity Prosperity fund is working to improve
green financial markets, this includes
Prosperity Fund green finance programmes a UK contribution of £120m into the
Green Growth Equity Fund.
Green Finance Institute Partnerships

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The Government’s ambition is for the UK to to understand, identify, and respond to challenges Enhancing climate and environmental researchers to support financial
remain a leader in developing innovative green and opportunities. data and analytics institutions and regulators to integrate
finance products and services and climate-related AI and geospatial data into financial
At the request of the Government, the City of Governments, regulators, academia, civil society
data and analytics. Our approach to doing this has services, and analyse the performance of
London’s Green Finance Initiative was established and the private sector all have a key role to
four elements: sustainable investments;
in 2016, bringing together financial sector play in developing and promoting access to
Creating effective regulatory and policy leaders, academics, and the civil society into environmental and climate-related financial • The Spatial Finance Initiative (SFI) which
frameworks and encouraging common a market development group. Subsequently, data and analytics. This should help investors was established in 2019 by The Alan
standards to correct market failures and HM Treasury and the Department for Business, make better informed decisions and stimulate Turing Institute, Satellite Applications
promote consistency, clarity, and best Energy and Industrial Strategy (BEIS) jointly the development of new financial products, Catapult, the GFI, and the University of
practice; convened the Green Finance Taskforce, composed including green Fintech, unlocked from enhanced Oxford Sustainable Finance Programme
of leading experts on green finance to work data availability, analytics and understanding of to mainstream the use of geospatial data
Promoting dialogue between
with their industry peers to provide a series potential applications. and analysis in financial decision-making
government, regulators, academia, and
of recommendations on how to accelerate the globally88; and
the financial sector to understand and The UK Government already provides a wealth
growth of green finance. The GFI will build on
identify challenges and opportunities; of publicly available environmental and climate- • The work of the public-private partnership
these examples of public-private collaboration, as
related data, building on its reputation for Space for Climate – aimed at creating
Enhancing climate and environmental shown above.
publishing and using open data for accountability, a seamless supply chain of reliable and
data and analytics to reduce
There is also a constant dialogue between the UK innovation, and social impact87. For example, quality assured data ready to translate into
information asymmetries and foster
regulators and industry. For example, as referred the Government and publicly funded entities climate services including those needed by
transparency; and
to in Chapter 1, the Financial Conduct Authority are already showing leadership in the collection, the finance sector.
Developing policies to promote the and the Prudential Regulation Authority have management, and analysis on physical climate- In line with the Green Finance Taskforce
adoption and mainstreaming of green established a Climate Financial Risk Forum to related data, energy and greenhouse gas recommendations, the Government recognises
finance products and services. build capacity and share best practice across emission-related data. For further detail on the there is a need for further innovation and
financial regulators and the private sector UK’s public data sources and relevant institutions
Creating effective frameworks and coordination in data availability, comparability and
on green finance. The forum brings together pertaining to climate-related risk analysis please aggregation, as well as a better understanding of
encouraging common standards senior representatives from banking, insurance, see Annex B. existing datasets and potential applications within
Building on the UK’s reputation for quality and asset management. One of the forum’s
The Government is also committed to enhancing the financial sector. That is why:
regulation in financial services and thought four working groups is specifically focused on
innovation86. the quality, coverage and use of geospatial data • The Government is working with UK
leadership in climate policy, the Government
across all sectors of the economy, including Reseach and Innovation (UKRI) to
recognises the importance of fostering a policy The Government has also supported dialogues the financial sector – which is also in the remit explore options for future research
and regulatory environment that stimulates with regulators, other governments and the of the Geospatial Commission formed in April funding to reduce information
innovation and encourages investment in the real private sector on topics of innovation in financial 2018. Earth observation, combined with artificial asymmetries and promote transparency
economy. As set out in the first two chapters, the services. For instance, the Sustainable Finance intelligence (AI), has the potential to transform in the availability and application of
Government is committed to enacting forward- Study Group, co-chaired by the Bank of England the availability of data in our financial system and climate risk information. The Natural
looking and transparent real economy policies and and People’s Bank of China on behalf of the UK change how risks, opportunities and impacts are Environment Research Council (NERC) and
building robust green financial market frameworks and China, fostered discussion on the potential measured and managed by financial institutions. Innovate UK, which are part of UKRI, are
and common standards. of green securitisation, venture capital, and The UK already has world-leading capabilities in working together to deliver a research and
digital technologies leading to ways to mobilise both. innovation programme. This will develop
Promoting dialogue to support capital for the transition to a greener economy.
We welcome recent developments including: improved information and analytics on
innovation HM Treasury officials, regulators, financial
climate and environmental hazards, as well
institutions, and academics also took part in • The Alan Turing Institute (the UK’s
The bulk of expertise in green finance sits within as vulnerability and exposures to support
roundtables in Beijing and Hong Kong in Spring national institute for data science and AI)
the private sector and over the past few years the financial sector and other corporates.
2019 to discuss ways to operationalise green which, in support of the AI and Data Grand
we have consistently worked in collaboration Further details will be announced later this
asset-backed securities as well as the benefits Challenge, has established a Sustainable
with industry in developing policy. Fostering a year.
and risks associated with transferring green Finance Interest Group to bring together
dialogue between the public and private sector
securitised loans to institutional investors in the • The Government will work with the GFI to
is important to enable the sharing of expertise,
debt capital markets.
building momentum around new innovations, and

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explore the use of climate analytics and These actions will help promote the We welcome the launch of the FCA’s Green green bond to be value for money compared to
data to support mission-led coalitions mainstreaming of green finance products and Fintech Challenge in October 2018, building on the core gilt programme, which remains the most
(see Chapter 2), and to mobilise green services, and support green fintech. its pioneering regulatory Sandbox service and stable and cost-effective way of raising finance to
investment. Innovation hub, to help businesses test innovative fund day-to-day government activities (including
• The Geospatial Commission, together
Promoting the adoption and propositions in the market with real consumers. existing and new green expenditure). This owes to
with other Government backed mainstreaming of green finance The Green Fintech Challenge aims to support the strength of investor demand for gilts, the well-
products and services firms that require specific regulatory support in established nature and size of the market, as well
organisations (e.g. UK Research &
developing innovative green solutions to assist as the fact that gilts can be built up to benchmark
Innovation, NERC, the UK Space Agency, The UK Government recognises the importance the UK’s transition to a greener economy. The sizes across a range of maturities, resulting in a
The Satellite Applications Catapult, of enacting policies that foster innovation in initiative offers a range of support services for the highly liquid market and diverse investor base.
The Alan Turing Institute), and the green finance and the mainstreaming of new successful applicant depending on the individual
Spatial Finance Initiative, will explore products and services. This includes creating an The Government remains open to the introduction
needs and maturity of the firm, including a
how to accelerate UK efforts to secure environment that allows innovation to flourish and of new debt financing instruments but would
dedicated Innovate Adviser, authorisation support,
and support the adoption of geospatial promotes best practice – building on the LSEG’s need to be satisfied that any new instrument
live market resting in the sandbox, and formal and
datasets required to green the global leadership in mainstreaming new green products, would meet value for money criteria, enjoy
informal guidance. Applications closed in January
financial system. as shown in the Case Study below – as well as strong and sustained demand in the long-term
and the first nine successful applicants were
through direct incentives to stimulate innovation and be consistent with the wider fiscal objectives
announced in April this year89.
across asset classes and industry sectors. of government. The Government continues to
The UK Government is also committed to monitor the case for a sovereign green bond
supporting financial innovation that can and will keep this under review. Meanwhile,
encourage the decarbonisation of the UK housing the Government has already set out plans for
Case Study – the London Stock Exchange Group: Innovation in Capital Markets sector – a key contributor to UK carbon emissions. significant investments in clean and resilient
London Stock Exchange Group (LSEG) has taken a range of steps to support investors and issuers That is why: growth as outlined in Chapter 2.
in the transition to a low-carbon and sustainable economy. It has developed a comprehensive
• We are launching a £5 million Green
sustainable finance and investment offering and continues to innovate in support of market
needs.
Home Finance Innovation Fund to pilot Building Capabilities and Skills
over 18 months green home finance
As green finance continues to establish itself in
LSEG was the first major exchange in the world to launch a dedicated green bond segment back products that have sustainable business
the mainstream, there will be an increasing need
in 2015. It now has over 100 active Green and sustainable bonds listed on its markets by issuers models, will incentivise energy efficiency
for the UK and global financial services industries
including corporates, municipalities, sovereigns and multilateral development banks from 16 retrofit, and are supported and promoted
and related sectors to develop the capabilities
countries, which have raised more than $29 billion in 12 currencies. effectively by the lender. The pilots will test
of their workforce with relevant education
Renewable energy funds are another important structure to drive capital to the green economy. the extent to which green finance products
and training in green finance principles and
Listed green funds have been a success story at the LSEG, with 11 renewable funds, in addition to are attractive to consumers, drive energy
practice. As a leading global financial centre and
others focused on energy storage, energy efficiency and environmental technologies, collectively efficiency works and can be self-sustaining.
with a world-renowned network of universities
worth over $9 billion. The market for Yieldcos is also gaining traction with 12 renewable Yieldcos Government policies in this area need to and Chartered professional bodies, the UK is
currently on the LSEG with a market capitalisation of £7.6 billion. be focused on securing additionality by strategically placed to establish and promote
LSEG’s index and analytics business, FTSE Russell has been active in the global index space since addressing existing barriers to the adoption and global professional and educational standards for
2001 when the FTSE4Good Index Series was launched and currently has approximately $16 trillion mainstreaming of green finance products and green finance. Our aim is for the UK to consolidate
benchmarked to its indexes. Its data and analytics tools support many of the world’s largest asset services. In this context, the Government has been its reputation as the home of the green finance
owners as they look to integrate ESG into their investment strategies. carefully considering the call to issue a sovereign professional and to capture the commercial
green bond. opportunities arising from the global demand for
There has also been a significant uptake in Exchange Traded Funds (ETFs), with 64 ESG ETFs
Green bonds have demonstrated significant training and qualifications in green finance.
with a total value of $5.1 billion (as of Nov 2018) – up 45% compared to the previous year. 80%
of professional investors expect investment into ESG ETFs to grow over the next five years, with growth in recent years, and the Government
recognises the importance for this broader growth Working with professional bodies
20% expecting a dramatic rise in interest.
to continue. At present the Government does UK-based professional bodies are already leading
not plan to issue a sovereign green bond, given the world in embedding green finance into
the absence of significant barriers to market programmes of initial and continuing professional
for corporate issuances in the UK. In addition, development, as the examples below demonstrate.
the Government does not consider a sovereign Such programmes are designed to ensure that

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finance practitioners have the necessary skills and Building Consumer Awareness and the Taskforce on Growing a Culture of Social
expertise needed to understand climate science, Box 8 – Green Finance Education Demand Impact Investing in the UK, support for the new
integrate environmental factors into financial risk independent Impact Investing Institute (see Next
Charter As green finance becomes increasingly
analysis and investment decision-making, seize Steps below for more details), and the Investing
opportunities in green finance and help align On 14 May, Government together with the mainstream, there will be a growing demand for a Better World project.
private sector finance with the transition to a Green Finance Initiative hosted a roundtable for retail products such as green mortgages.
Improved consumer awareness and understanding The ‘Investing in a Better World91’ project,
clean and resilient economy. for CEOs of professional finance and
of how their money is invested will give individuals sometimes called The National Conversation
accounting bodies to discuss how they
For example, in 2018, the Chartered Banking greater agency in choosing these financial on Investing in the Global Goals, aims to better
could lead the drive to develop appropriate
Institute launched the new Green Finance products. This will help stimulate demand for understand the public’s views on ethical,
programmes of initial and continuing
Certificate – subsequently adopted by the green products and create a feedback loop with responsible and impactful investment practices.
professional development to build the
Chartered Institute for Securities and Investment greater innovation in the UK green finance sector. Its research will help industry understand the
capability and capacity of the banking,
– and Chartered Financial Analyst UK has recently Crowdfunding options and retail investment shape and scope of UK customer demand for
finance and professional services sectors to
launched an ESG Investing certificate. In a similar platforms are already leading the way and tapping responsible and impactful investment, in order to
mainstream green finance.
vein, work is underway in a wide range of UK- into this nascent market. support sustainable investment in the developing
based professional bodies to raise awareness of Following the roundtable, the Government, world and help deliver the Global Goals, a set of
the financial risks from climate change and embed a working group of professional bodies, While the Government’s Green Finance Strategy 17 goals agreed by world leaders at the UN to end
green and sustainable finance principles and and the GFI have developed a charter that has mainly sought to address the role of poverty and protect the environment.
practice. commits professional bodies to taking Government, regulators, financial institutions
and industry in growing green finance, we fully To achieve this, the Government is running a
prompt action to identify and address gaps in
Building on this work, the Government recognise the vital role of individuals in driving nationally representative survey of 6,000 people
the development of green finance knowledge
in collaboration with a working group of demand for green financial products and services on their values, awareness, interest, and barriers
and skills, and engage members on the
professional bodies and the GFI has developed and delivering the UK’s environmental objectives. to action. This will result in a comprehensive,
risks and opportunities climate change and
a Green Finance Education Charter. That is why the first Green GB Week in October statistically valid view on how the UK public thinks
environmental challenges present to their
2018 was aimed at engaging consumers on Clean about responsible investment. Interim results
professions. The Charter will be launched at
Global initiatives such as the Global Research will be available for the UN High Level Political
the Green Finance Summit in July 2019, with Growth issues, including green finance through
Alliance for Sustainable Finance and Investment Forum in July, where the UK will also present its
a wide range of UK-based professional bodies events, media and campaigns. We also welcome
– created in 2017 by a network of global research Voluntary National Review on its progress against
expected to sign up to the Charter by the end the Mayor of London’s Climate Action Week in
universities to promote multi-disciplinary achieving the Sustainable Development Goals
of the year. July this year, and the second Green GB Week
academic research on sustainable finance, are also domestically.
in November will provide further opportunities
advancing the agenda. Going forward the new GFI will work with UK-
for Government to reach new audiences with its DFID has also run a series of events to raise
based professional bodies to help build skills
messages90. awareness and to work with industry to support
Training for the Public Sector and capabilities in green finance.
The UK Government is taking forward a range more product development so that people have
While green finance capability in Government has more opportunities to invest in line with their
of broader activities to engage with individuals
grown significantly in recent years, developing values. The findings of this work will be publicly
and make it easier for them to invest in line with
green finance skills in the public sector continues in UK embassies and consulates globally on available after the UN General Assembly in
their values. The Department for International
to be important. That is why: Green Finance; and September. We will consider the findings as we
Development (DFID) and the Department for
• The Government has been working Digital, Culture, Media and Sport (DCMS) are implement the Green Finance Strategy, working
• The Government will be strengthening
closely with the University of Oxford to leading a number of cross-government initiatives closely with the GFI and the Impact Investing
its training for the public sector by
create a short course for UK government to make progress on this agenda. These include Institute.
organising a public-sector conference
policy officials to provide foundational on green finance, to take place on
knowledge on green finance. This has been 17 October 2019.
trialled by UK policy and trade officials
across 30 different High Commissions, The conference will aim to co-ordinate efforts
Embassies, Consulates, and Missions across on green finance policy across central and local
North America, Latin America, Southeast government, showcase work and successes,
Asia, and Australasia from December 2018 provide a forum to discuss emerging topics,
to June 2019. Financial and Professional and provide opportunities for peer learning and
services teams in the Department for exposure to latest practices on green finance.
International Trade have also trained staff

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Next Steps

This Strategy sets out the actions we will take will be conducting a review into the costs of
in the coming years to accelerate the growth of decarbonisation, including how to achieve this
green finance, both at home and overseas, and use transition in a way that works for households,
this to drive economic growth in the real economy businesses and public finances, and the
at a time of huge change and opportunity. The implications for UK competitiveness. Over the
Strategy supports the UK’s economic policy for summer we will publish our Energy White Paper
strong, sustainable and balanced growth and that will aim to bring down energy bills and
delivery of our modern Industrial Strategy. It also recently we’ve also developed sector deals on
helps to ensure the UK remains at the forefront nuclear, offshore wind and automotive that will
of global efforts to fight climate change and create green-collar jobs across the country and
protect our environment while strengthening the support the UK’s other world class sectors to
competitiveness of the UK’s financial services take part in this transition. For example the UK’s
sector. expertise in the North Sea from oil and gas is now
part of a growing offshore wind supply chain.
The Strategy comes at an important time for the
UK’s climate leadership following our setting of a
net zero emissions target and ahead of UN Global Capturing synergies with the impact
Climate Action Week in September and COP26 investment agenda
next year. The Government will continue to work
closely with the private sector as we deliver Impact Investment is investment with the
our strategy, building on the work of the Green intention to generate a positive, measurable
Finance Taskforce through the establishment impact on society and the environment alongside
of the Green Finance Institute, and we will seek a financial return. It is an important complement
opportunities to further strengthen our approach. to green finance and together they have the
potential to address some of the most pressing
As part of this, we will explore linkages to related social and environmental challenges in the UK
issues, such as delivering a just transition and and internationally. The UK has seen significant
accelerating social impact investing. growth in the impact investment market over
the last two decades supported by a number of
Delivering a just transition pioneering government initiatives. Big Society
The transition to a clean, low carbon economy can Capital was established in 2012, with funding
help give us towns and cities with cleaner air and made available from dormant bank accounts, to
warmer homes with lower bills while growing our act as a market champion and as a wholesaler
economy and supporting new jobs in emerging of capital for voluntary community and social
low carbon industries. Already there are almost enterprise organisations committed to social
400,000 jobs in low carbon businesses and their or environmental impact. The Social Impact
supply chains in the UK. Investment Taskforce of 2013, launched as part of
the UK’s presidency of the G8, created a network
But as our economy changes it is vital we make of National Advisory Boards for each member
sure that this growth is inclusive, benefitting state to drive impact investing.
people across the UK, supporting workers as
industries transform and ensuring the costs as In 2016, Government set up an independent
well as the benefits are shared fairly, protecting Advisory Group chaired by Dame Elizabeth
consumers, workers and businesses. This is why Corley (former Chief Executive and Vice-Chair at
alongside our announcement of legislating for Allianz Global Investors) to answer the question:
net zero, we also announced that HM Treasury “How can the providers of savings, pensions and

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investments engage with individuals to enable Reviewing progress Annex A – Prosperity Funding key institutions; supporting a green finance hub;
them to support more easily the things they mobilising green finance for the development of
care about through their savings and investment
The Strategy sets out an ambitious approach that and UK PACT Programmes smart cities and infrastructure and developing
will require strong collective action to deliver. We
choices?” Their report, ‘Growing a Culture of supporting green finance market green bonds.
also recognise the systemic changes required will
Social Impact Investing in the UK”92, made far- development
not happen overnight. Brazil: The Green Finance strand of Brazil’s
ranging recommendations for government,
India: India’s Prosperity Fund programme Prosperity Fund programme aims to mobilise
regulators and industry. In March 2018, the Prime To quote Bank of England Governor Mark
will work in partnership with government and private finance and support effective allocation
Minister commissioned an industry taskforce to Carney in the context of breaking the ‘Tragedy
regulators in India to help develop a green of government resources to leverage private
progress the recommendations in the report. The of Horizon’; ‘the task is large, the window
finance market. The programme aims to improve investment into sustainable infrastructure. This
Taskforce published their final report in June this of opportunity is short, and the stakes are
financial market regulations, promote innovation will be achieved by developing Brazil’s green
year. existential’93.
in green finance instruments / taxonomies, and finance sector and using UK expertise to develop
This Taskforce has been closely aligned with the To ensure we meet the challenge, we will: mobilise green finance. £120million of prosperity new capital markets instruments for sustainable
Green Finance Taskforce in working to promote a • Specifically review progress on funding has also been used to support the Green infrastructure. It complements the energy strand
more sustainable future for our planet and people. greening the UK’s financial system, Growth Equity Fund (GGEF), which aims to crowd of the Brazil programme which supports the
Key areas of collaboration identified include: the including implementation of the TCFD in private sector investment to finance green transition to a low carbon economy.
role of innovative technology; effective tax relief recommendations, by the end of 2020, as infrastructure projects. Further programming Colombia: UK PACT in Colombia works to directly
regimes, consistent reporting principles and outlined in Chapter 1; and used UK expertise to support the issuance of influence the growth and development of green
innovation of financial instruments and structures green bonds, resulting in an Indian public sector
• Conduct a formal review of progress finance flows and local and international capital
to leverage incremental capital. We will continue company committing $4 billion to finance
against the ambitions and plans across all markets. The programme works in partnership
to explore green finance synergies with impact vital clean energy infrastructure in India. This
three chapters of this Strategy in 2022. with the government in several priority areas
investing initiatives in the UK, including as we commenced with a first tranche of $300 million for green finance, including unlocking finance
seek to support the establishment of a new Impact worth of green ‘masala’ bonds issued on the flows and mobilising investment, asset-owner
Investing Institute (see Box 9). London Stock Exchange. information disclosure to promote transparency,
Mexico: The Energy strand of the Mexico a green bond roadmap and a climate finance
Prosperity Programme aims to develop the skills accelerator.
of men and women, businesses, and government China: The energy and low carbon strand of the
Box 9 – A new Impact Investing Institute institutions to support Mexico’s transition to China Prosperity programme aims to reduce
a low carbon economy. Likewise, prosperity global emissions by accelerating China’s low
The Impact Investing Institute, announced in June, is being established to accelerate the growth funded indicative activities as part of the carbon energy transition, capitalising on UK
and improve the effectiveness of the UK impact investing market. It brings together the UK Financial Services Agile Programming Fund will energy and low carbon expertise. The programme
National Advisory Board on Impact Investing (UK NAB) and the Implementation Taskforce for seek to complement efforts to catalyse green will focus on clean technology policy and
Growing a Culture of Social Impact Investing in the UK (Implementation Taskforce) and will be led finance in Mexico through capacity building, regulation, thereby supporting the transition away
by their chairs, Sir Harvey McGrath (former Chair of Man Group and Chair of Big Society Capital) policy recommendations, and market guidelines from unabated coal; fundamental energy system
and Dame Elizabeth Corley (former Chief Executive and Vice-Chair at Allianz Global Investors). (including, but not limited to, a taxonomy for reforms; and enhancing China’s engagement with
The Institute will combine the energy, supporter base and achievements of these two groups to green projects). international energy and climate governance
provide a focal point for the UK impact investing market and accelerate the potential for finance structures.
to improve people’s lives at home and in developing countries. UK PACT in Mexico spans across several sectors,
with a strong focus on green finance. As well as The first UK PACT projects in China strengthen
The Institute has broad backing across the financial services and social sector, and will be work on renewable energy, climate policy, waste collaboration between the UK and China on green
supported by private firms and foundations alongside the Department for Digital, Culture, Media and sustainable transport, UK PACT works closely finance, building on the priorities highlighted by
and Sport (DCMS), the Department for International Development (DFID) and the City of London with the Mexican Government to increase access the UK and Chinese governments in their EFDs
Corporation. It will work with government as well as regulators and other policy makers to drive to green finance at a national and sub-national (see Case Study in Chapter 1).
thought leadership and innovation. One such body is the new GFI, which will champion green level. The programme focuses on harmonising
finance in the UK and abroad. Both Institutes will identify areas where there are common themes Indonesia: Under the Indonesia Renewable Energy
guidelines and standards; improving pipeline
and opportunities for joint working. Programme there is a focus on increasing green
development and increasing innovation in green
finance flows into Indonesia’s renewable energy
finance products and green finance policy design.
sector through technical assistance and capacity
Projects include: capacity building work with
building.

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Association of Southeast Asian Nations Projections will also help businesses and • Defra’s Environment Analysis Unit is Energy and GHG- emissions- related data
(ASEAN): The ASEAN Low Carbon Energy individuals to take action to improve developing a new online resource that will
• National Atmospheric Emissions
Programme will strengthen policy and regulatory resilience. make the evidence base on natural capital
Inventory (funded by BEIS, DEFRA,
frameworks for green finance and energy more accessible to non-specialists. This
• Environmental change: In May 2019 The Welsh Government, The Scottish
efficiency; facilitate greater investment in low resource will synthesise and signpost a
the government published an outcome Government and Northern Ireland’s
carbon technologies, including improved green very wide range of published valuation
indicator framework for measuring Department of Agriculture, Environment
finance flows; increase innovation and knowledge and natural capital evidence, guidance,
environmental change pertinent to the and Rural Affairs) provides estimates
transfer in energy efficiency and low carbon tools and applications to support analysts
goals of the 25 Year Environment Plan. of emissions to the atmosphere from
technologies; and facilitate more efficient use of and decision-makers to better value and
This framework of 66 indicators acts guides UK sources such as cars, trucks, power
energy in target countries. account for natural capital in England. An
readers to many of the available data sets stations and industrial plants and land use.
initial version will be launched during 2019,
that can inform them about key aspects of Free and open access data is available on
Annex B - UK Public Sector environmental change, including factors
and improved versions are planned to be
gov.uk to support companies in reporting
developed as this area evolves.
Climate-related Data Ecosystem related to climate resilience. emissions Including conversions factors to
• The UK hosts the European Space calculate emissions from metrics such as
Physical environmental data • UK Research and Innovation (UKRI)
Agency Climate Change Office. This runs energy use;
Strategic Priorities Fund, the Natural
• Flood map data: The Environment the Climate Change Initiative (CCI+).
Environment Research Council and the • Energy Performance Certificate (EPC)
Agency publish a wide range of flood risk The European Space Agency (ESA) Climate
Met Office, alongside the Engineering data: MHCLG will seek to publish an update
information, including maps, as open data, Change Initiative (CCI), is a programme
and Physical Sciences Research Council to the EPC data available through the Open
for example, the ‘Risk of Flooding from whose aim is to provide stable, long-term,
(EPSRC), the Economic and Social Research Data Communities website and commit
Rivers and the Sea’ and ‘Risk of Flooding satellite-based Essential Climate Variable
Council (ESRC) and the Arts and Humanities to regularly update this data to support
from Surface Water’ and related datasets94. data products for climate modellers and
Research Council (AHRC), have launched lenders in driving energy efficiency by
Not all this information considers the researchers. This can be achieved by
a UK Climate Resilience Programme evaluating the EPC performance of their
effects of climate change directly, but may realising the full potential of the long-
(£18.7 million), aimed at bringing together lending portfolios, to improve the energy
still give an idea of what increased flood term Earth Observation (EO) archives that
fragmented climate research and efficiency of buildings within lenders’
risk looks like. ESA, together with its member states, has
promoting multi – and inter-disciplinary portfolios. We will also consider how this
• From 2024 the quality and range of flood established over the last 30 years, as a
climate risk and adaptation research95; data could be made available on a “live”
risk information available will improve when significant and timely contributions to the
basis as part of updating the EPC Register
• The Centre for Environmental Data ECV databases required by United Nations
the new national flood risk assessment is platform.
Analysis (CEDA) serves the environmental Framework Convention on Climate Change
published. This information will consider a
science community through provision of (UNFCCC). The activities of the programme • The UK is a mission partner on
range of climate change scenarios in line
a long term data archive, a data intensive are undertaken across Europe with the UK MicroCarb, the first European mission to
with UK Climate Projections (UKCP18),
supercomputer (JASMIN), and participation leading many of the science areas. measure carbon. The UK Space Agency
supporting planning activities seeking
in a host of relevant research projects, for is working with the French Space Agency
resilience to future climates. • The adoption of the UK-led Traceable
example by providing access to UKCP18 CNES on various parts of the hardware
• The UK Climate Projections (UKCP18): Radiometry Underpinning Terrestrial
datasets. CEDA is primarily funded and the development of the algorithms
Launched by DEFRA last year, these Met and Helio-Studies (TRUTHs) mission as
by NERC (based within RAL Space, a with world experts from University of
Office projections (funded by DEFRA a European Space Agency Earthwatch
department of the Science and Technology Leicester and University of Edinburgh.
and BEIS) provide the most up-to-date Mission. Proposed by the National Physical
Facilities Council), provides state of the
Laboratory, TRUTHS is a small to medium Geospatial Data
assessment of how the climate of the UK art data storage, through three data
may change over the 21st century. UKCP18 size EO operational mission aiming to • The Geospatial Commission was formed
centres, and data processing facilities to
is the first major update to the UK’s enhance our ability to estimate the Earth in April 2018 as an independent expert
support environmental science, further
national climate change projections for radiation through direct measurements committee to advise government on the
environmental data archival practices, and
nearly 10 years, and the suite of products and to enhance interoperability and most productive and economically valuable
develop and deploy new technologies to
includes global and regional scenarios. performance of the global earth observing uses of geospatial data and to deliver
enhance access to data. The CEDA data
Government will make use of UKCP18 system, through cross-calibration with beneficial changes. The Commission is
archive is part of a family of NERC data
to inform its adaptation and mitigation other satellites. looking to publish a National Geospatial
centres that together form the NERC
planning and decision-making, and the Environmental Data Service.

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Strategy at the end of this financial year growth through research and innovation,
19/20. Their activities over the coming and positioning EO as a fundamental
year are framed within two pillars, the infrastructure and tool underpinning
first focusing on unlocking the potential industrial strategy, policy and societal
of geospatial data in key areas across the needs.
private and public sectors and the second
• The UKSA works on climate services
growing the geospatial ecosystem through
through the Space for Climate partnership
activities focusing on data improvement,
– a public-private-academic partnership
building skills to use geospatial data and
working collaboratively to ensure a
the adoption of technology and innovation.
seamless supply chain for climate data
‘An Initial analysis of the Potential
from space. Our collective ambition is that
Geospatial Economic Opportunity,’
the UK leads the world in trusted climate
published by Cabinet Office in 2018, shows
expertise and products. The UKSA is
a potential economic value of £6 billion to
seeking to chair CEOS (the Committee on
£11 billion per annum from high-value use
Earth Observation Satellites) in 2023/24.
cases, not including the financial sector
CEOS ensures international coordination
itself.
of civil space-based EO programmes and
• The UK Space Agency (UKSA) leads on civil promotes exchange of data to optimize
space policy. The UK has world-leading societal benefit and inform decision making
satellite EO capability, from developing for securing a prosperous and sustainable
and building missions to managing and future for humankind.
exploiting data and creating trusted
• The UK is home to a third of Europe’s
applications and services. The UK’s vision
total AI companies and twice as many
by 2040 is to maximise the potential of EO
as any other European country (MMC
– for the economy, science and society – by
Ventures, 2019). The AI and Data Grand
providing the quality-assured data required
Challenge’s AI sector deal – agreed
to underpin mass market and business
last year- 96 established of a strong
applications, cutting-edge science, and
partnership between business, academia
the development of effective and efficient
and government. £300 million has
policy and operational decision making.
been allocated by the EPSRC to fund
Our priorities include maximising the
research related to ‘data science and AI’
opportunities in international partnerships,
complementing the new centres for
investing in global innovation and
doctoral training mentioned above.

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 Green Finance Strategy

Endnotes 22 Bank of England (2018) Transition in thinking: The impact of climate change on the UK banking sector https://
www.bankofengland.co.uk/prudential-regulation/publication/2018/transition-in-thinking-the-impact-of-climate-
change-on-the-uk-banking-sector
1 The Presidency of the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on 23 The Network for Greening the Financial System (2019) A call for action: Climate change as a source of
Climate Change financial risk https://www.banque-france.fr/sites/default/files/media/2019/04/17/ngfs_first_comprehensive_
2 Energy Policies of IEA Countries: United Kingdom 2019 Review (2019), https://www.iea.org/newsroom/ report_-_17042019_0.pdf
news/2019/june/the-united-kingdom-has-made-major-progress-in-reducing-emissions-according-to-th.html 24 The Group subsequently became the Sustainable Finance Study Group under Argentina’s G20 Presidency
3 ONS (2019), Low Carbon and Renewable Energy Economy Survey. https://www.ons.gov.uk/economy/ 25 University of Cambridge (2016). Environmental risk analysis by financial institutions – a review of global
environmentalaccounts/bulletins/finalestimates/2017 practice. An input paper for the G20 Green Finance Study Group. https://www.cisl.cam.ac.uk/resources/
4 The Bank of England (retrieved June 2019), https://www.bankofengland.co.uk/news/2018/september/ sustainable-finance-publications/environmental-risk-analysis-by-financial-institutions-a-review-of-global-
transition-in-thinking-the-impact-of-climate-change-on-the-uk-banking-sector practice

5 Ibid 26 For example, the NGFS expects to dedicate more resources to the analysis of environmental risks (see https://
www.banque-france.fr/en/financial-stability/international-role/network-greening-financial-system/first-ngfs-
6 TCFD: 2019 Status Report (2019), https://www.fsb-tcfd.org/publications/tcfd-2019-status-report/ progress-report) and the DNB have published a report on the exposure of the Dutch financial sector to issues
7 Communiqué G20 Leaders Summit, Hangzhou, China, 5 September 2016, http://unepinquiry.org/wp-content/ such as water stress and biodiversity loss. https://www.dnb.nl/en/news/news-and-archive/DNBulletin2019/
uploads/2017/01/2016-09-04-g20-communique-en.pdf dnb381614.jsp

8 Bloomberg NEF (2018). Statement of Clean Energy Investment. https://about.bnef.com/clean-energy- 27 List of organisations reporting under adaptation reporting power: third round  https://www.gov.uk/govern-
investment/ ment/publications/climate-change-adaptation-reporting-third-round/list-of-organisations-reporting-under-ad-
aptation-reporting-power-third-round.
9 Statistics from Green Investment Group, (retrieved June 2019) https://greeninvestmentgroup.com/100-
projects/ 28 Prudential Regulation Authority (2015) The Impact of Climate Change on the UK Insurance Sector http://www.
bankofengland.co.uk/pra/Documents/supervision/activities/pradefra0915.pdf
10 National Infrastructure Commission (retrieved June 2019) https://www.nic.org.uk/our-work/national-
infrastructure-assessment/ 29 HM Department for Work and Pensions (2018) Pension Trustees: clarifying and strengthening investment
duties https://www.gov.uk/government/consultations/pension-trustees-clarifying-and-strengthening-
11 Government (2018), International Climate Finance Results https://www.gov.uk/guidance/international-climate-
investment-duties
finance
30 HM Treasury (2019) Asset Management Taskforce https://www.gov.uk/government/news/governments-asset-
12 PCC, (2018). Summary for Policy Makers-section A1. Special Report on Global Warming of 1.5°C, https://www.
management-taskforce-revamped
ipcc.ch/sr15/chapter/summary-for-policy-makers/
31 The last Letters of Recommendations were issued to the FCA and PRC at Spring Budget 2017 (FCA: https://
13 IPCC, (2014). Summary for Policy Makers – section B. Contribution of Working Group I to the IPCC 5th
www.gov.uk/government/publications/recommendations-for-the-financial-conduct-authority-spring-
Assessment Report, https://www.ipcc.ch/report/ar5/syr/ .
budget-2017; PRC: https://www.gov.uk/government/publications/recommendations-for-the-prudential-
14 IPCC, (2013): Section B1 and Table SPM.1, SPM, Climate Change 2013: The Physical Science Basis. Contribution regulation-committee-spring-budget-2017).
of Working Group I to the 5th Assessment Report of the IPCC, https://www.ipcc.ch/report/ar5/wg1/
32 The last Remit and Recommendations letter was issued to the FPC at Autumn Budget 2018 (https://www.gov.
15 The Royal Society, (2018), Keeping Global Warming to 1.5°C, https://royalsociety.org/topics-policy/ uk/government/publications/remit-and-recommendations-for-the-financial-policy-committee-budget-2018).
publications/2018/keeping-global-warming-to-1-5-c/
33 The Transition Pathway Initiative (retrieved June 2019) http://www.lse.ac.uk/GranthamInstitute/tpi/
16 IPBES, (2019), Summary for Policy Makers. Global Assessment Report on Biodiversity and Ecosystem Services,
34 UN Principles for Responsible Investment (retrieved June 2019) https://www.unpri.org/
https://www.ipbes.net/system/tdf/spm_global_unedited_advance.pdf?file=1&type=node&id=35245
35 UN Environment Programme Finance Initiative Principles for Sustainable Insurance (retrieved June 2019)
17 IPCC, (2013), Section B1 and Table SPM.1, SPM, Climate Change 2013: The Physical Science Basis. Contribution
https://www.unepfi.org/psi/
of Working Group I to the 5th Assessment Report of the IPCC, https://www.ipcc.ch/report/ar5/wg1/
36 UN Environment Programme Finance Initiative Principles for Responsible Banking (retrieved June 2019)
18 Reuters (retrieved June 2019) https://www.reuters.com/article/us-global-insurance-aon/2017-second-costliest-
https://www.unepfi.org/banking/bankingprinciples/
year-on-record-for-natural-disaster-insured-losses-aon-idUSKBN1FD22Y
37 The Taskforce Force on Climate-related Financial Disclosures (retrieved June 2019) https://www.fsb-tcfd.org/
19 IPCC, (2018). Chapter 2. Special Report on Global Warming of 1.5°C, https://www.ipcc.ch/sr15/
38 HM Government Guidance – Green Finance (retrieved June 2019) https://www.gov.uk/guidance/green-finance
20 20. IPBES, (2019). Summary for Policy Makers. Global Assessment Report on Biodiversity and Ecosystem
Services https://www.ipbes.net/system/tdf/spm_global_unedited_advance.pdf?file=1&type=node&id=35245 39 The Financial Conduct Authority (2018) Discussion Paper: Climate change and green finance https://www.fca.
org.uk/publications/discussion-papers/dp18-8-climate-change-and-green-finance
21 The concept of natural capital was defined by the Natural Capital Committee, an independent advisory body
to government, in its first state of natural capital report. https://assets.publishing.service.gov.uk/government/ 40 The Bank of England Prudential Regulation Authority (2019) Enhancing banks’ and insurers’ approaches to
uploads/system/uploads/attachment_data/file/516707/ncc-state-natural-capital-first-report.pdf managing the financial risks from climate change https://www.bankofengland.co.uk/prudential-regulation/
publication/2019/enhancing-banks-and-insurers-approaches-to-managing-the-financial-risks-from-climate-
change-ss
74 75
 Green Finance Strategy

41 The Bank of England (retrieved June 2019) https://www.bankofengland.co.uk/news/2019/march/first-meeting- 58 Ricardo-AEA for the CCC (2017). UK business opportunities of moving to a low-carbon economy: https://www.
of-the-pra-and-fca-joint-climate-financial-risk-forum theccc.org.uk/publication/uk-energy-prices-and-bills-2017-report-supporting-research/ https://data.oecd.org/
gdp/gdp-long-term-forecast.htm
42 The Network for Greening the Financial System (2018) First Progress Report: https://www.banque-france.fr/
sites/default/files/media/2018/10/11/818366-ngfs-first-progress-report-20181011.pdf 59 New northern forest gets Government backing, (2018) https://www.gov.uk/government/news/new-northern-
forest-gets-government-backing
43 The TCFD Knowledge Hub (retrieved June 2019) https://www.tcfdhub.org/
60 BEIS internal analysis
44 IPBES (2019) Global Assessment Report on Biodiversity and Ecosystem Services https://www.ipbes.net/global-
assessment-report-biodiversity-ecosystem-services 61 Managing the impact of climate change: First International Standard for adaptation published (retrieved June
2019) https://www.iso.org/news/ref2405.html
45 OECD (2019) Biodiversity: Finance and the Economic and Business Case for Action. A report prepared by the
OECD for the French G7 Presidency and the G7 Environment Ministers’ Meeting, 5-6 May 2019. http://www. 62 Report by the utility company to the Environment Agency
oecd.org/environment/resources/biodiversity/biodiversity-finance-and-the-economic-and-business-case-for- 63 Greening Government Commitments (2016), (retrieved June 2019), https://www.gov.uk/government/
action.htm collections/greening-government-commitments
46 For example, a cooperation of a group of financial institutions (including ASN Bank and CDC Biodiversité, 64 New Climate Economy (2016) The Sustainable Infrastructure Imperative https://newclimateeconomy.net/
ACTIAM and Finance in Motion) have developed a biodiversity foot printing methodology to set out a common publications
ground for capturing nature-related impacts of commercial operations iV “Into the wild: integrating nature into
investment strategies (WWF/AXA). 65 OECD (2017) Investing in Climate, Investing in Growth https://www.oecd.org/env/investing-in-climate-investing-
in-growth-9789264273528-en.htm
47 SDG Knowledge Hub (June 2019), G7 Environment Ministers Commit to Fight Biodiversity Loss, Tackle Climate
Change, Inequalities (retrieved June 2019), https://sdg.iisd.org/news/g7-environment-ministers-commit-to- 66 UK Government (2018) International Climate Finance Results https://www.gov.uk/guidance/international-
fight-biodiversity-loss-tackle-climate-change-inequalities/ climate-finance

48 European Commission Sustainable Finance Action Plan (retrieved June 2019) https://ec.europa.eu/info/ 67 UK Gov (2018) UK Climate Finance Results 2018 https://www.gov.uk/guidance/international-climate-
business-economy-euro/banking-and-finance/sustainable-finance_en#commission-action-plan-on-sustainable- finance#our-results
finance 68 GET FiT Uganda (2018) Annual Report 2018 https://www.getfit-uganda.org/home/get-fit-annual-report-2018/
49 International Organisation for Standardisation (retrieved June 2019) https://www.iso.org/ 69 GCPF (2018) Annual Report https://www.gcpf.lu/id-2018.html
committee/7203746.html
70 Lloyds (2018) A world at risk: closing the insurance gap https://www.lloyds.com/news-and-risk-insight/risk-
50 Bank of England – Fair and Effective Markets Review (retrieved June 2019) https://www.bankofengland.co.uk/ reports/library/understanding-risk/a-world-at-risk
markets/fair-and-effective-markets
71 GCF 2019 data (retrieved June 2019) https://www.greenclimate.fund/what-we-do/portfolio-dashboard
51 UN Environment Programme (2018) G20 Sustainable Finance Study Group Document Repository http://
unepinquiry.org/g20greenfinancerepositoryeng/ 72 BEIS (2019) internal results data

52 HM Government Green Book: appraisal and evaluation in central government (retrieved June 2019) https:// 73 Climate Investment Funds (2019) Report of the Trustee on the Financial Status of the SCF https://www.
www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent climateinvestmentfunds.org/documents/report-trustee-financial-status-scf-8

53 The National Infrastructure Commission: Resilience Study (retrieved June 2019) https://www.nic.org.uk/our- 74 Climate Investment Funds (2019) Report of the Trustee on the Financial Status of the CTF https://www.
work/resilience/ climateinvestmentfunds.org/documents/report-trustee-financial-status-ctf-10

54 National Infrastructure Commission: National Infrastructure Assessment (retrieved June 2019) https://www. 75 Climate Investment Funds (2019) CTF Semi- Annual Operational Report https://www.climateinvestmentfunds.
nic.org.uk/assessment/national-infrastructure-assessment/ org/sites/cif_enc/files/meeting-documents/ctf_23_4_sar_0.pdf

55 OECD/IEA (2015), World Energy Outlook Special Briefing for COP21. http://climateknowledge.org/figures/Rood_ 76 IATI (2018) Investments in Forests and Sustainable Land Use Annual Review http://iati.dfid.gov.uk/iati_
Climate_Change_AOSS480_Documents/IEA_COP21_Paris_Briefing_IntEnerAgen_2015.pdf documents/43402360.odt

56 BEIS, Final UK greenhouse gas emissions national statistics, https://www.gov.uk/government/collections/ 77 Mkopa & CDC 2019 internal results data
uk-greenhouse-gas-emissions-statistics#publications; ONS, Gross Domestic Product: chained volume 78 Ricardo and Energy & Environment for the Committee on Climate Change (2017). UK business opportunities of
measures, https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/pn2; UNFCCC, moving to a slow carbon economy. https://www.theccc.org.uk/wp-content/uploads/2017/03/ED10039-CCC-UK-
National Inventory Submissions 2019, https://unfccc.int/process-and-meetings/transparency-and-reporting/ Bus-Opportunities-Draft-Final-Report-V7.pdf
reporting-and-review-under-the-convention/greenhouse-gas-inventories-annex-i-parties/national-inventory-
79 The Investment Association (2018). Asset Management in the UK 2017-2018. The investment association annual
submissions-2019; World Bank, International Comparison Program database, https://data.worldbank.org/
survey. https://www.theia.org/sites/default/files/2019-04/20180913-fullsummary.pdf
indicator/NY.GDP.MKTP.PP.KD; World Bank, Population Statistics.
80 Association of British Insurers (2019) UK Insurance and Long-Term savings. The state of the market 2019.
57 Bloomberg New Energy Finance (2018) Clean Energy Investment Trends, 2018 https://about.bnef.com/clean-
https://www.abi.org.uk/globalassets/files/publications/public/data/abi_bro6778_state_of_market_2019_web.
energy-investment/ 
pdf

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81 The City UK (2018). Key facts about the UK as an international financial centre 2018. https://www.thecityuk.
com/assets/2018/Reports-PDF/94053cfc7b/Key-facts-about-the-UK-as-an-international-financial-centre-2018.
pdf
82 The City UK (2018). Key facts about the UK as an international financial centre 2018. https://www.thecityuk.
com/assets/2018/Reports-PDF/94053cfc7b/Key-facts-about-the-UK-as-an-international-financial-centre-2018.
pdf
83 London Stock Exchange 2019 Webpage (accessed in June 2019). Why Choose London? https://www.
londonstockexchange.com/companies-and-advisors/listing/london/london.htm
84 The government has been working with insurers to help make flood risk insurance more affordable, notably
through Flood Re – a re-insurance Scheme that makes flood cover more widely available and affordable as part
of your home insurance; FloodRe (retrieved 2019). Flood Re is helping insurers to help householders at risk of
flooding. (retrieved June 2019). https://www.floodre.co.uk/about-us/
85 The UK government and the World Bank launched The Centre for Global Disaster Protection in July 2017
to strengthen resilience in developing countries through better preparedness and planning backed by risk-
based financing arrangements; HM Government. (2017). GOV.UK Blog. Centre for Global Disaster Protection.
(retrieved June 2019). https://dfidnews.blog.gov.uk/2017/07/20/centre-for-global-disaster-protection/)
86 Financial Conduct Authority (2019). Press Releases: First meeting of the PRA and FCA’s joint Climate Financial
Risk Forum. (retrieved June 2019). https://www.fca.org.uk/news/press-releases/first-meeting-pra-and-fcas-
joint-climate-financial-risk-forum
87 In 2017, the UK ranked joint first globally in on the Open Data Barometer, a measure of how governments are
publishing and using open data for accountability, innovation and social impact. (Open Data Barometer, 2018)
https://www.gov.uk/government/publications/artificial-intelligence-sector-deal/ai-sector-deal-one-year-on
88 Green Finance Initiative (2019) Webpage: News: Spatial Finance Initiative Launched. (accessed in June 2019).
http://www.greenfinanceinitiative.org/spatial-finance-initiative/
89 These included Barclays, CoEnergy.app, Cogo, Energimine, I-Warranty, Neural Alpha, Plenitude, Enian, and
Sustainability. Exchange; Financial Conduct Authority (2018). Webpage : Green Fintech Challenge – successful
applicants. (accessed in June 2019) https://www.fca.org.uk/firms/fca-innovate/fintech-challenge.
90 HM Government (2019), Green GB & NI. https://greengb.campaign.gov.uk/
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92 Advisory Group on Growing a Culture of Social Impact Investing in the UK (2017). https://www.gov.uk/
government/publications/growing-a-culture-of-social-impact-investing-in-the-uk
93 A New Horizon. Speech given by Mark Carney, Governor Bank of England. European Commission Conference: a
global approach to sustainable finance. (21 March 2019)
94 Data.gov.uk, Environment Agency (retrieved June 2019) https://data.gov.uk/
search?filters%5Bpublisher%5D=Environment+Agency
95 NERC UK: Climate Resilience Programme Overview (retrieved June 2019) https://nerc.ukri.org/research/
funded/programmes/ukclimate/
96 Department for Business, Energy and Industrial Strategy and Department for Digital, Culture, Media and Sport
AI Sector Deal (2019) (retrieved June 2019) https://www.gov.uk/government/publications/artificial-intelligence-
sector-deal/ai-sector-deal

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