Two researchers at the Environmental Change Institute (ECI) have contributed to a new e-book on policies the new government should prioritise in its first six months to address climate change and transform the UK into a net zero finance hub.
Emma O’Donnell, a DPhil student with the ECI’s Resilience and Development team and Dr Jimena Alvarez, Lead of Greening Finance for Nature at the ECI, are among nearly forty experts from business, finance, international organisations and academia, who’ve made urgent policy recommendations.
The introduction in the e-book, Accelerating Transition - Climate finance policies to prioritise in the first 100 days; says: “There is a historic opportunity for the UK - the home of the industrial revolution - to become a global leader in sustainable finance. Effective policies can enable the UK to transform into a net-zero financial hub, spur innovation, and promote economic growth. Not only will these policies advance global climate goals, but they will directly benefit the British people by creating a more vibrant, resilient, and equitable society.”
In the chapter, At Risk: Aligning Financial Resilience, Climate and Biodiversity Goals, Emma O’Donnell said:
The government has laid out its vision of the UK as a leading green financial centre. It is vital to ensure nature is part of this vision. As well as our financial strength, the UK has world-leading scientific and technical capabilities on nature that can support this vision.
We encourage the government to ensure that all relevant legislation and activities related to climate and transition finance and financial market development fully integrate nature. This includes ensuring that opportunities for nature are part of the current Transition Finance Market Review and Finance and Markets Bill. Without such progressive and forward-leaning action, the UK will fall further behind other leading financial centres on this issue.”
Dr Alvarez added: “the Government must recognize that our economy is embedded within nature and depends on healthy, biodiverse ecosystems. Those systems are under threat. The UK is one of the most nature-depleted countries in the world and its economy and financial sector are highly dependent on natural systems globally that are being degraded.
“The first study on the financial materiality of nature-related risks to an economy and financial system was conducted in the UK and found that UK GDP was heavily exposed to domestic and international nature-related risks. Up to 12% of UK GDP could be at risk due to compounding nature-related financial risks, underscoring the severity of neglecting to consider nature-related risks in the UK and globally. Nature risks also amplify climate risks; the two issues are intertwined and inseparable.”
In addition to advice from leading universities, the book includes contributions from Bankers for Net Zero, the World Benchmarking Alliance, the Global Systems Institute, the Climate Bonds Initiative, Chapter Zero, the GARP Risk Institute and PWC and contains 25 specific, actionable recommendations. These range from providing stronger market incentives for green finance, to measures focussing on the built environment and power infrastructure.
The recommendations include:
- Establishing an Office of Sustainability Planning to develop richer and more realistic climate risk scenarios that might materialise over a 5 to10 year horizon
- Higher rates of capital gains tax for high-carbon emitters and polluters
- Mandating environmental considerations within the AI regulatory framework announced in the King’s Speech
- Encouraging green emerging market listings in London through streamlined listing processes and improved tax treatment
- Issuing the first developed market sustainability-linked sovereign bond and the first dedicated adaptation sovereign bond, and the expansion of the Green Gilt programme
- Providing capital and guarantees through UK Export Finance to help British innovators find markets for decarbonising and climate-adaptation technologies
- Aligning UK insolvency laws with net zero objectives to catalyse innovation in carbon-efficient projects.
- Simplified planning and approval processes for green energy infrastructure and green gigafactories
- Increasing the carbon price to support the transition to a low carbon economy, and investing the revenues strategically in the power grid and to ensure energy price stability
The e-book was compiled by Researchers at King’s Business School at King’s College London and the University of Edinburgh. David Carlin, Founder of Cambium Global Solutions & Visiting Research Fellow, King’s Business School, said:
This book seeks to spur action on the UK’s sustainable finance priorities by serving as a resource and inspiration for the nation’s policymakers at this critical moment. It intends to spark dialogues and actions to deliver a competitive, thriving, net-zero Britain.”
Professor David Aikman, Director of the Qatar Centre for Global Banking and Finance, King’s Business School, said: “We’ve pulled together a range of expert and diverse voices from the UK’s climate finance thought-leaders. While the suggestions vary, what they all have in common is a bias towards immediate action. These are all practical suggestions that the government could start work on tomorrow.”
Read the e-book: Accelerating Transition - Climate finance policies to prioritise in the first 100 days