The UK is set to become the world's "first ever net zero aligned financial centre", chancellor of the exchequer Rishi Sunak announced at the COP26 conference in Glasgow, Scotland on Wednesday.
Sunak lauded the Glasgow Financial Alliance for Net Zero (GFANZ) for bringing together financial organisations with assets worth $130tn (£95tn) of capital to be deployed – "this is a historical wall of capital for net zero transitions around the world," he said.
Pledges come from more than 450 firms from all parts of the financial industry, based in 45 countries across six continents, and have been delivered through the GFANZ, which was launched by the UK to harness the power of the financial sector in the transition to net zero.
He said the entire global financial system has to be rewired for net zero and that in order to protect the interest of private companies – who are interested in not just net zero but also financial metrics – it is important to provide better and more consistent climate data, mandatory sustainability disclosure, proper climate risk surveillance and stronger global reporting standards.
Sunak said over the next five years the UK will commit £100m to the taskforce on public finance, making it quicker and easier for developing countries – hit by the double tragedy of COVID and climate change – to access the finance they need.
“Its easy to fee daunted by the challenge but I feel optimism because this is the first COP to bring together so many of the world's businesses and finances minister with such a clear common purpose,” he said.
Kay Swinburne, vice chair of financial services, KPMG UK said: “This announcement will provide the financial services industry with a valuable set of unified metrics to measure progress towards decarbonisation and 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 by not only establishing the GFANZ initiative, but also expanding private sector commitments and supporting a science-based approach to reporting standards.”
As expected, Sunak also said it will soon be mandatory for firms to publish a “clear, deliverable plan” setting out how they will decarbonise and transition to net zero with an independent task force.
All financial institutions and listed companies in the UK will be forced to publish plans on how they will transition to net zero from 2023.
Hywel Ball, EY’s UK chair, said the announcement was "an extremely positive step in the fight against climate change. It’s been clear for some time that business need to move from purpose statements and pledges, to really focus on detailed transition plans and to start seeing hard evidence of action being taken.
“Making the requirement mandatory makes it slightly easier for companies to move at pace. If all those businesses in scope have to adhere to the same requirements, it keeps the playing field level for all."
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