Climate change is one topic that has managed to rise above both Brexit and the Tory leadership campaign in the news agenda.
The future of the environment is an issue that affects us all, not least the City. That is why tomorrow’s Green Finance Summit is an important opportunity to bring together green leaders from across the world.
The green finance sector can help to catalyse the transition away from fossil fuels to more sustainable energy. And the UK government is leading the way.
Building on the Paris agreement, the sector has committed the UK to becoming the first major economy to reach net-zero carbon emissions by 2050. More detailed plans to increase investment in sustainable projects will be outlined at the Summit tomorrow.
Our regulators are also at the cutting edge of policy in this area.
Speaking at the Mansion House last month, Mark Carney set out the Bank of England’s plans to begin stress-testing financial institutions for their resilience to climate change.
The capital is already a world-leader in innovation and green finance. The amount raised in green bonds on the London Stock Exchange has more than doubled since 2017.
We cannot afford, however, to rest on our laurels. More needs to be done and City firms have a vital role to play in driving this transition through environmental finance.
Common standards need to be agreed so that climate risk can be priced accurately, which will in turn enable investors to make informed decisions. Some businesses and industries face an existential threat unless they adopt carefully-considered long-term strategies.
It is important to recognise the opportunity as well as the threat. In every overseas market that I visit, there is a huge appetite for green finance. This is just as true for Colombia as it is for China.
Around $93 trillion of global infrastructure investment will need to be green by 2030 in order to meet climate change commitments, according to the Global Commission on the Economy and Climate Change.
It is welcome, therefore, that a significant number of firms have signed up to a set of green finance guidelines for the Belt and Road Initiative, the world’s biggest infrastructure programme.
These principles – published by the City of London Corporation and China’s Green Finance Committee – will help to improve corporate governance and transparency by embedding green finance at the heart of these huge projects.
Green finance has become an incredibly dynamic market in the space of a relatively short period. This shows how the City of London can work in collaboration with governments to deliver outcomes that are sustainable and environmentally-friendly.
There remains massive growth potential. As Mark Carney has said, it’s now time for sustainable investing to go mainstream.
Whatever the future holds, it is vital that the City and the UK remain at the forefront of this green revolution. In order to do so, we must continue to innovate and seize opportunities across the globe.