Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussions she has had with institutional investors on the barriers to scaling transition finance in priority sectors of the UK economy.

The government is prioritising the growth of the transition finance market to seize the opportunities for UK financial services firms and support decarbonisation. The Transition Finance Market Review (TFMR) identified a number of barriers to scaling transition finance, including unlocking defined contribution pension investment in the transition.

Building on the TFMR, the government set out the actions it has taken to promote the growth of this market in the Financial Services Growth and Competitiveness Strategy. This included reforms to unlock institutional investment in transition assets following the Pensions Investment Review. The government also launched the National Wealth Fund with additional capital, risk appetite and resources to proactively explore blended finance solutions.

The government is actively engaged with the Transition Finance Council, which the Chancellor co-launched with the City of London Corporation in November 2024. The Council brings together key stakeholders to discuss transition finance, including institutional investors.

The government is also supportive of the Financial Conduct Authority’s work, in partnership with the Prudential Regulation Authority and the Green Finance Institute, to spearhead a transition finance pilot – an innovative way to engage with the market on practical matters relating to scaling transition finance.