Setting out "clear and consistent policies and regulations" on decarbonising the wider economy will be the most effective way to unlock and stimulate UK leadership in green finance, a new report argues.
According to analysis from TheCityUK and PwC, around 70% of the $125tn (£110tn) of investment required globally to reach net zero must be found through private financial markets.
"There is a strong appetite in the UK to accelerate the reduction in carbon emissions as we move towards net zero, but we are not moving quickly enough," Jon Williams, partner at PwC Global Banking & Capital Markets ESG leader and PwC UK Sustainability Chair said. "The required effort must come from everyone – from policymakers to business leaders and consumers themselves."
The 'Enabling the net zero transition: the role of financial and related professional services,' details the risk factors across each sector which are preventing greater investment and capital from flowing to greener investment.
It lays out a 10-point plan to empower the government, regulators and wider industry to leverage the opportunities presented by expanding UK-based green finance.
Those include technological risk, business model risk, and policy risk. It then sets out how to address or reduce these risks to unlock the necessary investment.
It also explains how to achieve decarbonisation, including phasing out new combustion engine cars by 2030, or gradually increasing the energy efficiency requirements from all residential rental properties in England and Wales.
Miles Celic, chief executive office at TheCityUK, said: "Delivering the transition to net zero will take more than good intentions. It will require the government, regulators, and industry to work in close partnership.
"We all have our own role to play, and action by one cannot compensate for inaction by another. Financial regulations cannot substitute for government climate policies, and consumer spending choices cannot substitute for public and private investment.
"We are calling on the government to take forward a 10 point action plan to help unlock the vital investment needed to reach our net zero ambitions. We also need a clear and sustained cross-party commitment to net zero, with well-signalled policies to drive forward proactive decarbonisation across the whole economy."
The 10-point action plan calls on the UK government to:
Deliver effective, quantified, detailed and long-term national net zero policies, incentives, and regulations for the real economy industries
Develop and publish interim national net-zero capital raising plans, to set out the UK’s investment needs to 2030/2035 and how it intends to raise the capital required
Address and share investment risks through the scaling of blended finance and other incentives
Facilitate deeper collaboration between policymakers, regulators, corporates and SMEs to scale up investment – and address greenwashing and support the Just Transition
Continue to engage with other jurisdictions to drive global convergence and interoperability on sustainability disclosure and reporting standards – so that the UK as an international finance centre can build on its strengths to deliver green and sustainable investments in the UK and beyond
Improve disclosures by extending the scope of Taskforce on Climate-related Financial Disclosures and net zero transition plans to include smaller and privately owned businesses in a proportionate way — and ensuring that the UK’s green taxonomy and Sustainability Disclosure Requirements distinguishes between green and transitioning activities
Seek to increase the level of disclosures for direct and indirect GHG emissions, as and when data availability and accuracy improves
Commit to producing an initial assessment of how markets are using climate-related data within its forthcoming update to its Green Finance Strategy
Further develop the role of carbon pricing through carbon and environmental credit markets – by widening carbon cap and trade schemes appropriately, and working on an international carbon price floor
Establish a regulatory framework for carbon and environmental credit markets – to achieve transparency, environmental integrity, and standardisation of methodologies for carbon and environmental credit certification
Watch: Top tips for helping the environment on a tight budget