MP’s debate greening the UK’s financial system

Following on from the Westminster Hall debate on greening the financial system that took place last week, Asim Ali, IEMA’s Public Affairs Officer discusses the importance of the development and delivery of the UK Green Taxonomy.

MP’s from across the Commons discussed ways in which different parts of the economy and society can tackle the climate emergency, especially through our financial system. An estimated £32 trillion of investment is required to decarbonise the global economy.

The issue of our financial system not advancing the interests of the planet was raised by Olivia Blake MP. Over 70% of all world emissions are caused by 100 of the wealthiest corporations. Since the significant Paris agreement, the world’s largest banks have financed fossil fuel projects of up to $3.8 trillion.

However, Britain is one of the biggest net exporters of financial services in the world. Our weight in the global financial system means we have the influence to reshape it for the better. The Financial Services and Markets Bill, which is due back in the House of Commons tomorrow, is seeking to give the UK the opportunity to create a more competitive financial services sector post-Brexit, whilst also preserving high regulatory standards tailored to our needs.

The central role of the Bill is to deliver the government’s vision for an open, green, and technologically advanced financial services sector that is globally competitive.

Unprecedented levels of investment to finance new green infrastructure projects are required, to decarbonise our energy supplies, update existing infrastructure, protect and restore our natural environment, and to create thousands of well-paid, secure jobs in the process. Only then can we build a green new deal that is transformative enough to address climate change and ensure a just transition.

The UK Green Taxonomy's significance was explored by Alexander Stafford MP as part of last week’s debate. He is the Chair of the All-Party Parliamentary Group on Environmental, Social, and Governance.

It aims to provide a common framework, setting the standard for investments that can be defined as environmentally sustainable, combating "greenwashing," improving understanding of environmental impact to help businesses and investors make informed green choices, supporting investment in sustainable projects, and boosting efforts to combat climate change.

The UK has a good track record of developing environmental and green finance policies, and the introduction of a green taxonomy will expand on that. The essential next stage in the UK's march toward green finance is to deliver a solid and scientifically based Green Taxonomy. This will ensure that the UK's globally oriented financial sector promotes green investment and institutions dedicated to net zero.