A joint report from ECI, the Green Finance Institute and the Smith School of Enterprise and the Environment highlights how finance is essential to the delivery of a climate ready economy.
The UK must act urgently to tackle the transition to net-zero, nature recovery, and climate readiness. All require major investment in people, similar industries, infrastructure and landscapes: the financing mechanisms exist, and the commercial imperative is clear.
Finance is often cited as a barrier to adaptation, however, the report argues that the core issue is not finance, but a lack of targeted policy. The authors provide a diagnostic tool to assess the gaps in policies needed to align finance with a climate-resilient economy and mobilise investment in adaptation.
How and where financial investors choose to lend or invest today can have a big influence on the resilience of the UK economy for decades to come. Evidence from the Taskforce on Climate-related Financial Disclosures (TCFD) and the Bank of England show that physical climate risks are not being fully accounted for in financial decision-making, while least one survey indicates that financial professionals, regulators and economists see physical climate risk as the top risk over the next 30 years.
Policy is needed now to address market failures and create the right enabling environment for finance to flow, in the same way that it has started to do for net-zero. The report conclusions are summarised into six pillars:
- Set a clear, ambitious vision and strategy for adaptation
- Lead in defining adaptation targets for each sector and outline clear plans that can accelerate action and investment from 2024, including aligning regulation
- Set the right enabling environment to align finance for a Climate Ready UK
- Gear up government to drive adaptation and align policy with adaptation goals
- Power up public finance to support adaptation
- Make the UK the leading net-zero, resilient and nature-positive finance hub.
The UK government, and corporates, need an integrated vision, policies and plans for a net zero, climate resilient and nature-positive economy.
- Read the report on the Smith School website: Mission climate ready: Unleashing finance and investment for a prosperous climate ready economy, pdf (Opens in a new tab) (2.7 MB, 78 pages)