Chancellor sets out plans for UK to become the world’s first net zero financial centre

New UK climate finance projects funded from the UK’s international climate finance commitment will help developing countries to fund green growth and adapt to the changing climate.

Chancellor plans to establish the UK as the first net zero financial centre, with hope of encouraging other countries to follow suit.

Over $130 trillion will now be aligned with the climate goals in the Paris Agreement, thanks to climate commitments from financial services firms.

These commitments will help create money to fund our net zero transition, including the move away from coal, the shift to electric cars, and the planting of more trees.

Convening for COP26, Rishi Sunak will set out the UK’s sustainability plans and unveil how to decarbonise our financial centre, including new requirements to publish net zero transition plans as the UK moves towards to a net zero economy by 2050.

A science-based ‘gold standard’ will be put in place for transition plans to prevent greenwashing.

Commitments to reach net zero and achieve the Paris Agreement goals come from over 450 firms from all parts of the financial industry, based in 45 countries across six continents, and have been delivered through the Glasgow Financial Alliance for Net Zero (GFANZ).

The UK has also worked as chair of the G7, and in partnership with other G20 countries, to ensure all economic and financial decisions take the risks of climate change into account.

The UK has convened over 30 advanced and developing countries from across 6 continents and representing over 70% of global GDP to back the creation of a new global climate reporting standards by the IFRS Foundation to give investors the information they need to fund net zero.

Reiterating the importance of getting finance to the most vulnerable countries, Mr Sunak will also highlight that the $100 billion climate finance target will be met by 2023.

The UK will seek to address barriers to finance faced by developing countries with a series of new green initiatives funded from its international climate finance (ICF) commitment.

In total, the UK will spend £576 million on a package of initiatives to mobilise finance into emerging markets and developing economies.

And in a further advance towards the $100 billion goal, the Chancellor will announce the launch of an innovative new financing mechanism - the Climate Investment Funds’ Capital Markets Mechanism (CCMM) - that will boost investment into clean energy like solar and wind power in developing countries.

The UK is already the biggest donor to the multilateral Climate Investment Funds, having contributed £2.5 billion, and will now give the returns from its investments to CCMM.

This new fund will use these returns to help it issue green bonds worth billions of pounds in the City of London and could leverage an extra $30-70 billion from other sources for specific clean energy projects.