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UK government releases Green Finance Strategy

The UK government has launched its Green Finance Strategy which aims to improve responses to the financial risks from climate change.

In the eBook, which can be found on the government’s website, outlines the roles the financial sector has in delivering global and domestic climate and environmental objectives. The booklet explores the proposals for green finance, which is the development of projects and initiatives which foster cleaning living and sustainable resources.

By supporting this, the UK hopes to meet its ambitions for low carbon emissions, its 25-year environment plan, and a boosted industrial environment for the country.

Following the launch of the strategy, the UK’s Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), The Pensions Regulator (TPR) and Financial Reporting Council (FRC), have made a joint declaration welcoming the publication.

The regulators have underlined the financial risks and opportunities of climate change and are collaborating to solve them. This includes working with the Government’s new taskforce which was created to support the strategy.

In addition to this, the FCA has acknowledged the Chancellor’s announcement the regulator will need to refer to the COP21 Paris Agreement, an international agreement to lower greenhouse gases, when advancing its objectives and discharging duties. The FCA plans to reflect this in a new letter of recommendation to the treasury.

On the launch of the strategy, Emma Howard Boyd, chair of the Environment Agency, said, “I’m delighted to see the launch of the Green Finance Strategy and we look forward to working closely with the Green Finance Institute to further its aims, particularly on climate resilience.

“The joint working group with regulators on climate-related financial disclosure will drive businesses to do more by ensuring investors take better account of climate risks.

“The World Economic Forum’s Global Risks Report ranks extreme weather events number 1. This presents a massive investment opportunity in technology, infrastructure, and expertise to protect people and businesses.

“The International Trade Secretary recently announced UK Export Finance and the Environment Agency will work together to help UK suppliers with expertise in adaptation deliver infrastructure projects and services around the world. We want to build international partnerships and position the UK supply chain at the forefront of this market.”

The FCA has already taken action to support the financial risks of climate change, having recently published a discussion paper on its effects. It also released new requirements to improve shareholder engagement and increase transparency around stewardship.

A review is currently underway for responses to a discussion paper published jointly with the FRC on building a regulatory framework for effective stewardship. This legislation would deal with a number of issues related to climate change and green finance.

In particular, it explores how asset owners and asset managers could integrate climate change and other environmental, social and governance (ESG) factors into their investment activities.

Last year, the FCA released the Green FinTech Challenge in which nine firms developed solutions which help the UK transition to a low carbon economy.

Earlier in the year, the FCA and PRA held its first Climate Financial Risk Forum (CFRF). The discussions aim to build practical guidance on each area and distribute these in the industry.

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