We need to mainstream green finance, argues UK minister

“Green finance has yet to reach its full potential,” said John Glen MP, the UK’s government’s minister for the City of London.

He was speaking yesterday to an audience of leading policymakers and financiers about the challenges the sector faced from climate change.

“…For too long, tackling climate change has been left to government, with the private sector largely left by the wayside,” he said, while pointing out that the industry is finally gaining a seat at the table.

London is one of the world’s leading centres for green finance and has so far issued 78 green bonds with a combined value of $24 billion. The purpose of the minister’s speech was to reaffirm the government’s commitment to the area and secure London’s place as a leader in the burgeoning market.

“The conversation has been dominated by a few specific areas, such as green bonds. And whilst there will always be a place for them, more lies further afield…in the breadth, and depth of global capital markets.”

He went on to argue that new financial instruments, such as green loans, mortgages and securitisation are gaining traction and the capacity to grow these markets has so far been largely untapped.

Leading institutional investors and pension funds have been slow to respond to the risks and opportunities posed by climate change. However, the market for green bonds has increased by 80 percent in five years and major European insurers have started to move away from the fossil fuel industry.

The momentum behind green finance needs to grow to the point where it becomes part of the mainstream, and simply ‘finance’, Mr Glen concluded.

Last month, the UK’s Chancellor of the Exchequer, Philip Hammond, announced a new Green Finance Institute to attract more investment in the market. Mr Glen’s speech also announced a new Advisory Board to guide the strategy of the institute.

The Green Finance Summit, only the second time it has taken place, was hosted at London’s Guildhall. Lord Nicholas Stern, also speaking at the conference, said that the green transition was the “growth story of the century” and that governments needed to provide clear and reliable policies to accelerate this transition.

 

Photo Credit: Green Finance