Financial Services: Environment Protection

(asked on 24th February 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the effect of shareholder stewardship on tackling claims of greenwashing in the financial sector.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 4th March 2022

In October 2021 the Government published Greening Finance: A Roadmap to Sustainable Investing. This sets out the Government’s expectation that asset managers, asset owners and their service providers will act as responsible stewards of capital by using information disclosed via the Sustainability Disclosure Requirements to engage with investee companies. The Government has an active and ongoing dialogue with the sector on this.

The Roadmap also includes policies to prevent greenwashing such as the UK Green Taxonomy. This will take an objective and science-based approach to determining which economic activities are environmentally sustainable. To support this, the Government has created a Green Technical Advisory Group to provide independent advice on market, regulatory and scientific considerations.

Last year the UK successfully launched its green financing programme, under which it issues green gilts. Future financing plans for 2022-23, including for the green gilt, will be announced in the usual way in the Debt Management Office’s financing remit at the forthcoming Spring Forecast. In October 2021, the Government launched its first green retail product through NS&I – Green Savings Bonds (GSB). GSB provides savers with the opportunity to contribute towards green projects chosen by the Government, as set out in the Green Finance Framework.

Local authorities have full, independent control over their borrowing choices and are free to issue local climate bonds if they wish. It is for them to determine the most appropriate financing mechanism for their projects. The Government considers current funding options for local authorities to pursue environmental projects to be appropriate, and that existing statutory guidance is sufficient for outlining options for local authorities with regards to financial borrowing. This includes issuing local climate bonds, an option which some local authorities have taken up.

Decarbonisation of the housing stock will be crucial to the UK achieving Net Zero. Home finance can provide the financial means for homeowners and landlords to undertake home energy efficiency improvements. The Government released a consultation in November 2020 on the role mortgage lenders can play in supporting homeowners to improve their home’s energy performance, and recently announced a £10m Green Finance Accelerator programme to support the development of innovative green finance products. In recent years, there has been an increase in the number of green finance products on the market, with the release of over thirty green mortgage products in the last two years. The Government will continue to work with mortgage lenders to encourage further development of green mortgage products.

HMG’s 25 Year Environment Plan and Green Finance Strategy are clear that private finance has a key role to play in achieving our environmental ambitions. This is why the Autumn Budget and Spending Review 2021 set an ambitious new target to raise at least £500m in private finance to support nature’s recovery every year by 2027 in England, rising to more than £1bn by 2030. Supported by the Government from its inception, the Taskforce on Nature-related Financial Disclosures (TNFD) will provide a framework for corporates and financial institutions to report and act on evolving nature-related risks. TNFD will build, consult on and test its framework, which it aims to launch in 2023. As part of its response to the Dasgupta Review, the Government committed up to £3m additional support to the development of the TNFD framework.

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