New Green Finance Strategy – response

March 30, 2023 

The government has today published a long-awaited update to its Green Finance Strategy, setting out plans to map green investment flows, articulate investment needs by sector, and summarise “the relevant government policy and funding to make the sector investable” by the end of the year. The strategy also sets out plans to move ahead with the delayed UK Taxonomy, proposing to label ‘nuclear’ as green, and consult on extending mandatory transition plans to all large companies, not just listed ones.

Fran Boait, executive director of research and campaign group Positive Money, commented:

“Today’s commitment to map and track investment in net zero by sector is a welcome step towards filling the gaping holes in the government’s financing strategy. But further private sector engagement and information gathering is not going to be sufficient to shift capital at the speed required to keep temperatures to 1.5C.

“Despite the government’s spin, levels of public investment in net zero are falling far short of what is required. In a higher-interest-rate environment, the government and the Bank of England should also be using targeted lending schemes to ensure critical green investment is not impaired by the higher cost of capital.

“What is absent from this strategy is a plan to wind down financing of fossil fuels and other environmentally destructive activities. The government is right to emphasise that climate change poses profound risks to financial stability, which is why it is concerning that the Bank of England is stalling on reflecting the high risk of fossil fuel lending in its capital frameworks.”

Notes

• Mobilising green investment: 2023 Green Finance Strategy, Thursday 30th March 2023: https://www.gov.uk/government/publications/green-finance-strategy#:~:text=The%20Mobilising%20Green%20Investment%3A%202023,net%20zero%20and%20environmental%20objectives.

• In July 2022, 75 leading thinkers spanning academia, civil society and policy organisations set out 5 key principles to making the Green Finance Strategy a success: https://positivemoney.org/2022/07/75-leading-thinkers-call-for-an-overhaul-of-green-finance-rules-press-release/

• The Bank of England recently said further research would be needed to integrate climate into capital frameworks. Report on climate-related risks and the regulatory capital frameworks, Monday 13th March 2023: https://www.bankofengland.co.uk/prudential-regulation/publication/2023/report-on-climate-related-risks-and-the-regulatory-capital-frameworks

• 13.6 million people could lose their job worldwide in the next financial crash driven by fossil fuels. $4.9 trillion of taxpayers’ money might be needed to rescue banks if the fossil fuel market crashes in the next decade. One for One campaign, “Banking on Bailouts” report, 12 Jan 2023: https://oneforonenow.org/sites/default/files/2023-01/Banking%20on%20Bailouts%2C%20Sizing%20the%20social%20costs%20when%20the%20carbon%20bubble%20bursts-12Jan22.pdf

• Civil society groups have been vocal in opposing the European Commission’s inclusion of both nuclear and gas in the EU Green Taxonomy: https://reclaimfinance.org/site/en/2022/02/02/the-eu-taxonomy-becomes-the-new-standard-for-greenwashing/

For more information or to speak to a spokesperson, please contact press@positivemoney.org.uk or Anna Pick on 07948802104.