Climate advocates support UK’s green finance strategy but say more must be done

April 12, 2023|Written by Todd Phillips|Bank of England

Thirty-four academics and climate advocates sent a letter to Grant Shapps, the United Kingdom’s Secretary of State for Energy Security and Net Zero, responding to the green finance strategy the government announced in March.

In the letter, led by Positive Money UK, the signatories “welcome the positive signals contained in” the strategy, including commitments to tracking green investment across sectors and placing a greater focus on nature. They warn, however, that “the window for reallocating capital in line with a 1.5ºC transition is narrow, and current action is falling short.” Submitted with a more comprehensive briefing document, the letter identifies significant failures on the part of the government to release its taxonomy of “green” activities and allocate new funding in its budget, and on the part of the Bank of England in reducing its climate-related efforts.

The government’s green finance strategy was announced last month as a way to “scale up affordable, clean, homegrown power” in Britain, though it did not allocate new funding. Just days prior to its release, the UK’s Climate Change Committee warned that the country is “strikingly unprepared” to address climate change.

Some signatories to the letter were more pointed and critical. Fran Boait, executive director of Positive Money UK, said that the government’s strategy shows “just how out of touch this government is with households facing skyrocketing energy and food prices because of their addiction to oil and gas”.

Lukasz Krebel, economist with the New Economics Foundation, similarly noted that “by not acting decisively, this government is allowing finance to continue to make the climate crisis worse and is exposing UK financial stability to growing risks”.

The letter encourages the UK government to take ten identified actions, including giving regulators statutory objectives to align their activities with net zero and nature protection, increasing green public investment and the capacity of the UK Infrastructure Bank, and making climate and nature transition planning mandatory for large companies and financial institutions. These steps would be aligned with what the Intergovernmental Panel on Climate Change says is needed to keep global temperature rise below 1.5ºC.

This page was last updated April 12, 2023

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