London is the global hub for green finance says UNEP

London is a global hub in the fast-growing green finance arena, according to a new report released on Thursday by the UN Environment Programme.

The report comes as policymakers and financial institutions are focusing on how to mobilise the required capital to implement the Sustainable Development Goals and the Paris Agreement on Climate Change which were agreed last year.

The report was released at a major event co-hosted by UNEP and the City of London Corporation, where a new Green Finance Initiative was launched by the City with the aim of making London the world leader in green finance.

UNEP Executive Director Achim Steiner said: "2016 is set to be the year of green finance. Across the world, we are seeing a growing number of countries aligning their financial systems with the sustainability imperative. I wholeheartedly welcome this new green finance initiative from the City of London, the first of what's likely to be a very busy year."

Sir Roger Gifford, chair of the Green Finance Initiative, said: "The City of London Corporation is determined that 2016 be the year in which policymakers and practitioners convene to drive the long-term development of the UK's green finance sector. As the UN Environment Programme put it so clearly, the financial system we need is one that fully supports and facilitates the transition toward a low-carbon economy, and we believe London can play a leading role in this process."

The report, entitled The UK: global hub, local dynamics - mapping the transition to a sustainable financial system profiles the actions that have been taken over the past 15 years to make environmental and social factors a core part of banking, capital markets, investment and insurance.

It shows that the UK has evolved a distinctive model of innovation in sustainable finance, based on a close interaction between social entrepreneurs, mainstream financial institutions and, increasingly, financial policy and regulation.

Importantly, this process has been deepened by the response to the global financial crisis, with a more profound focus on the systemic implications of issues such as climate change.

Nick Robins, Co-director of the UNEP Inquiry and co-author of the report, said: "London is not just a global financial centre, but also a hub for green and sustainable finance. It is striking just how many key global initiatives are clustered in London - whether on responsible investment, green bonds, unburnable carbon, sustainable banking, climate disclosure or insurance risk."

The report concludes that UK leadership in many areas is clear, yet sustainability could be classified as a 'sleeping giant' of the financial system.

Based on deep interactions with UK stakeholders, the report closes with a set of priorities for a UK Sustainable Financial Strategy, including:

• Establish a Green Bond hub to take forward the UK's position as one of the top issues of bonds focused on environmental solutions
• Empower individuals with the right information on the sustainability performance of their investments
• Rethink housing finance to reduce energy costs and environmental impacts
• Take a system-wide view on environmental risk, extending the Bank of England's review of insurance to other sectors such as banking
• Explore the green potential of alternative finance, building on the UK's leadership in areas such as peer to peer lending.

The UNEP Inquiry into the Design of a Sustainable Financial System was established in January 2014 with a mandate to advance policy options that would improve the effectiveness of the financial system in supporting sustainable development.

Supported by a high-level Advisory Council of financial leaders, the Inquiry has looked in-depth at practice in more than 15 countries as well as across key segments of the financial system, such as banking, bond and equity markets, institutional investment, insurance as well as monetary policy.

To reach its findings, the Inquiry has worked with central banks, environment ministries, international financial institutions as well as major banks, stock exchanges, pension funds and insurance companies.