RISHI Sunak will today unveil a “historic” deal that will see the firms controlling 40 per cent of global financial assets gear their business towards tackling climate change.
In the opening speech of Finance Day at COP26, the Chancellor will hail the pledge made by 450 private companies in charge of £95 trillion.
The institutions have committed themselves to help limit global warming to 1.5C above pre-industrial levels in line with the 2015 Paris Agreement.
The aim is to create a huge pool of cash that could fund the transition to net zero, including a move away from coal, a shift to electric cars, and the planting of more trees.
Nicola Sturgeon and London Mayor Sadiq Khan will also appear at an event on how investors can back the green technologies of the future.
Hosted by Scottish Enterprise, the green investment showcase will include tech companies in search of financing.
Convening the largest ever meeting of finance leaders on climate change, Mr Sunak will also set out the UK’s “responsibility to lead the way” and reveal plans to make the UK a net zero financial centre.
Under the proposals, UK financial institutions and listed companies will be forced to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards to a net zero economy by 2050.
To avoid cynical “greenwashing”, a science-based ‘gold standard’ for the transition plans will be drawn up by industry and academic leaders, regulators, and civil society groups.
The aim is to increase transparency, with the Government leaving it to the market to determine if the plans are adequate or credible.
Companies will be expected to start publishing them in 2023.
The 450 finance firms, based in 45 countries on six continents, have made commitments under the Glasgow Financial Alliance for Net Zero (GFANZ), which was launched by the UK to harness the power of the financial sector in the move to net zero.
The Chancellor will say progress has been made to “rewire the entire global financial system for net zero”, call on companies to “mobilise private finance quickly and at scale,” and urge governments to put laws in place that can free up private cash.
In 2015 developed countries promised to make $100bn dollars (£73bn) of climate change finance available to less developed countries annually to help them move to net zero.
However the target is unlikely to be met until 2023.
Ahead of Finance Day, Ms Sturgeon said: “COP26 provides what is possibly our best chance to advance the societal and economic change that is demanded by the climate emergency, delivering lasting action towards net-zero and a climate-resilient future.
“By grasping the opportunities provided by green industries and supply chains, we can create the good green jobs of the future and secure a just transition away from fossil fuels.
“The role of private capital is fundamental to achieving this and governments must do what they can to channel investment into areas supporting transformational change.”
Mr Khan added: “Climate action and economic growth must go hand in hand – in London I’m investing in green technology which generates good quality jobs for Londoners and across the UK. Turning the tide on climate change will require record investment and coordinated action from everyone – cities, businesses, governments and communities.
“That’s why I am committed to working with the Scottish Government in pioneering green investment and I’m proud to announce that I will be committing over £30m in additional funding in London which will help encourage up to £150m of private investment in low carbon projects.”
Also speaking at COP26 today will be SNP Finance Secretary Kate Forbes, who will take part in a UK Government on a ‘Financial System for Net Zero’.
Scottish Green minister Lorna Slater, who has been prevented from attending in person by Covid, will speak virtually at a fringe event on waste and net zero.
Responding to the plan to make the UK the world’s first net zero aligned financial centre, Dr Ben Caldecott, Director of the UK Centre for Greening Finance and Investment, said: “This is huge. This will spur demand for green finance and accelerate decarbonisation, not just in the UK but wherever UK firms do business.”
Dr Rhian-Mari Thomas, Chief Executive of the Green Finance Institute said: “Today marks the day that green finance has reached a point of critical momentum.
“The amount of capital committed to the transition to net zero has reached unprecedented levels.
"The task before us now is to come together in radical collaboration to unlock opportunities at speed and scale so we can channel this wall of capital into real economy outcomes that not only positions the UK as the world’s first net zero financial centre but also delivers a just and resilient net-zero global economy.”
Kay Swinburne, Vice Chair of Financial Services at KPMG UK said: “This announcement will provide the financial services industry with a valuable set of metrics to measure progress towards decarbonisation.
"It is brave to put a gold standard in place for all companies raising funding.
"We’re pleased to see the UK lead by example, not only establishing GFANZ, but expanding private sector commitments [with] a science-based approach to reporting standards.”
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