RegulationApril 12, 2023

UK Launches Green Finance Strategy

The British government hopes to raise more than £1 billion annually toward reaching net zero by the end of the decade.

Reported by Michael Katz

The British government is aiming to raise at least £500 million ($619.3 million) per year in private finance by 2027, rising to more than £1 billion annually by 2030, as part of its goal to reach net zero of greenhouse gas emissions by 2050. The target was released as part of the U.K.’s “Green Finance Strategy” report.

“We need a healthy and thriving natural environment to meet our Net Zero goals and build our resilience to climate change,” U.K. Secretary of State for Environment, Food and Rural Affairs Thérèse Coffey said in a release. “Our announcement today sends a signal that the opportunities from investing in our farmland, forestry, peatlands and marine areas are great and offer long term rewards for people and nature.”

The Green Finance Strategy includes:

An agreement that farmers will be supported to better measure their emission sources through carbon audits by 2024;
Publishing a Nature Markets Framework that will enable revenue streams from different markets to be combined to support projects with goals such as increasing biodiversity and improving water quality;
Providing four authority areas with funding of up to £1 million each as part of the Local Investment in Natural Capital program, which is intended to attract investment in local priorities for nature; and
Working with the British Standards Institution to develop a range of nature investment standards.

The U.K. government also published its 2030 Strategic Framework for international climate and nature action and International Climate Finance Strategy. The 2030 Strategic Framework is intended to build resilience to current and future climate impacts, as well as to stop and reverse biodiversity loss. The International Climate Finance strategy outlines the U.K.’s commitment to spend £11.6 billion of international climate finance between 2021-22 and 2025-26 to help developing countries adapt to climate change.

“To decarbonize in 27 years, and meet our environmental objectives as set out in our Environmental Improvement Plan, and deliver energy security, we will require a step-change in levels of investment,” the report stated. “The global transition to a resilient, nature-positive, net zero economy will see trillions of pounds reallocated and invested into new technologies, services and infrastructure.”

The Green Finance Strategy has been welcomed by U.K. regulators the Financial Conduct Authority, the Financial Reporting Council, the Bank of England and The Pensions Regulatory.

“Managing the risks and opportunities associated with climate change is crucial to maintain the resilience of the financial system,” the regulators said in a joint statement. [Source]

The strategy was also lauded by state-owned agencies UK Export Finance, the British Business Bank, UK Research and Innovation, and the UK Infrastructure Bank.

“Moving our economy towards net zero is both an environmental necessity and a huge economic opportunity,” said a joint statement from the organizations. “There is a real chance to drive business value, unlock growth, and scale technologies across all sectors, regions and nations of the United Kingdom.”