A new initiative has been launched to improve the financing options for sustainable infrastructure projects in London as a new report finds that the UK is considered to be a global hub for green finance.
The Green Finance Initiative (GFI) was launched by the City of London Corporation at an event on 14 January and seeks to place London at the centre of a market expected to attract £100 billion-a-year in green bonds. These will be used to finance sustainable infrastructure projects and the City of London Corporation working alongside the UK government is seeking to use London’s convening power and relationship with industry to find practical ways to support the market.
Speaking ahead of the launch last week, the Lord Mayor of the City of London the Lord Mountevans, said: “Following the important COP21 conference in Paris, this is a crucial time to build on the momentum of green finance, and it’s vital that industry is involved in this. Our initiative aims to support the market through practical action, allowing both London and the green finance industry to benefit from the exciting new opportunities in the market.”
The first phase of the GFI will focus on improving the flow of projects generating green bonds in the UK and push the development of a low-carbon infrastructure strategy. It will also seek to improve investor confidence in green products and better inform and incentivise the market.
Members of the initiative will be drawn from banks, insurers, accountants, academics, regulators, and government.
The launch of the initiative coincided with the publication of a new report by the UN Environment Programme’s (UNEP) Inquiry into the Design of a Sustainable Financial system. The report claims that over the last 15 years, the UK has developed a distinctive model of innovation in sustainable finance, based on a close interaction between social entrepreneurs, mainstream financial institutions and, increasingly, financial policy and regulation.
It concludes that sustainability could be classified as a ‘sleeping giant’ of the UK financial system and makes a number of suggestions on how the UK could become even more of a leader in the sustainable market.
These include the establishment of a green bond hub to further promote the issuing of bonds focused on environmental solutions. It also suggests changes to housing finance to reduce energy costs and environmental impacts, and suggests that efforts be made to continue the track record of the Green Investment Bank.
Sir Roger Gifford, chair of the Green Finance Initiative, said: “The City of London Corporation is determined that 2016 be the year in which policymakers and practitioners convene to drive the long-term development of the UK’s green finance sector. As the UN Environment Programme put it so clearly, the financial system we need is one that fully supports and facilitates the transition toward a low-carbon economy, and we believe London can play a leading role in this process.”