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Can London Become a Global Leader in Sustainable Finance?

  • The City of London is a global leader in sustainable finance, offering a wide range of services and products to support the transition to net zero.
  • Investing in the green transition is not only good for the climate but also for economic development.
  • The financial services sector has a crucial role to play in providing the funding mechanisms needed to accelerate the transition to a greener future.

Investing in the green transition, in the companies based in the Square Mile, is good for the climate fight and for our own economic development, says Chris Hayward

Of the City’s many strengths, few have such global significance as our expertise in sustainable finance.

Tomorrow, that talent and expertise will be on show at the City of London Corporation’s annual Net Zero Delivery Summit.

London is ranked first is the Global Green Finance Index because we offer a one-stop-shop to investors, firms, and governments. In the Square Mile, we offer the widest range of sustainable finance services and products – from ESG funds to sustainability advice to insurance and more – ready to help businesses and governments transition to net zero.

The Summit is an annual health check for how well we are delivering on the climate transition. Designed as a mid-point between each COP, the summit convenes global financial and professional services alongside policymakers to reflect on the commitments made and actions still to be taken.

At COP28 in Dubai last December, over 85,000 people gathered, and the message was clear: we must transition to net zero faster. Our climate actions must be stronger. That means improving resilience mechanisms to offset climate change impacts – cooling our streets for example or reducing greenhouse gas emissions by harnessing more renewable technology.

But perhaps the most important message of all, and this is where the City and financial institutions are so important, is the need for private sector finance to support the transition.

In the words of former, US Special Presidential Envoy for Climate, John Kerry, who spoke at the inaugural Net Zero Delivery Summit, “We have to put in place more rapidly the funding mechanisms that are going to actually fuel this transition at the pace it needs to be”.

Given the sustainable finance expertise, capital, products and services available in the City, the Square Mile should acknowledge the challenges of net zero, but also see the transition as – to borrow from Chris Skidmore’s review – the ‘economic opportunity of the 21st century’.

The London Stock Exchange was the first to launch a voluntary carbon market designation. And the UK is home to one-fifth of all global investors signed up to the ‘Race to Zero’ campaign – the world’s largest coalition of non-governmental actors to halve global emission by 2030.

Investing in the green transition, in the companies based in the Square Mile, is good for the climate fight and for our own economic development.

We have the opportunity to fund transformative technologies. Support our growing green tech sector, companies that can process significant amounts of data so that we can better measure our carbon footprint. We can also invest in green technologies to support decarbonisation in energy and transport.

After all, green growth is economic growth. For example, the Centre for Research on Energy and Clean Air, estimates that 40 per cent of China’s economic growth last year was from clean energy industries.

We have the opportunity to put transition finance into action. As 2030 emission targets come into view, increasing attention is being paid to how higher emitting companies and activities are financed. The UK’s Transition Finance Market Review, launched in January, is developing frameworks that can be shaped in London and adopted worldwide.

And we have the opportunity to support nature finance. Over half – 55 per cent – of the world’s GDP is moderately or highly dependent on nature. Whether that’s farmers growing food supplies, transporting materials by sea, or using reservoirs for our water consumption. By integrating nature into financial and business decisions, we can both support the planet and safeguard our global economic ecosystem.   

The Net Zero Delivery Summit will gather global experts, so that the financial services sector can maximise its contribute to climate solutions, and strengthen our economic outlook in the process. Together, economic growth and sustainability are two sides of the same coin – we cannot have one without the other.

By CityAM

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