Green financing framework

It discusses how financing expenditures through the issuance of green gilts and Green Savings Bonds will be critical in tackling climate change and other environmental challenges.

The UK’s main sustainable targets are: reaching Net Zero by 2050; limiting global warming to well below 2°C, but aiming for 1.5°C; reducing emissions by at least 68% by 2030, and 78% in 2035 compared to 1990; and doubling the provision of international climate finance to £11.6 billion over the period 2021-2025 to help support developing countries respond to the challenges of climate change.

However, in order to achieve these targets, a significant increase in infrastructure investment will be required. This includes transport electrification, the expansion of renewable and low-carbon power generation, as well as the development of low-carbon hydrogen technologies, and the government will actively support research and development of innovative technologies. Even if these technologies already exist, they require further investment to become cost competitive.

The UK is also promoting mandatory reporting of climate related disclosures in line with the Taskforce for Climate-related Financial Disclosures (TCFD), and is encouraging other countries to do the same. The IoD has called on all directors to step up and implement this common reporting framework throughout their organisations to support the UK’s green transition.

The Green Finance Strategy set out in HMT’s Framework is three way:

1. Greening Finance: mainstreaming climate and environmental factors as a financial and strategic imperative.
2. Financing Green: mobilising private finance for clean and resilient growth.
3. Capturing the opportunity: affirming the UK’s leadership in Green Finance.

Central to this strategy is the introduction of Sovereign Green Gilt Issuance and Green Savings Bonds, and HMT will issue the UK’s first Sovereign Green Gilt in 2021 by the UK Debt Management Office. Additionally, the UK’s first Green Retail product will be launched via the National Savings and Investments (NS&I), that will enable individuals to support green projects, and will help boost green finance into the mainstream.

HM Treasury intends to allocate proceeds from any Green Gilt and Green Savings Bonds to finance ‘Eligible Green Expenditures’ (expenditures that meet the environmental eligibility criteria set out in the Green Financing Framework).

Sustainable policy is a very important priority for the IoD, which is why we are very happy to have been able to contribute to this document, which represents the UK’s commitment to lead the global effort towards a greener future.

For more information, please visit:

20210630_UK_Government_Green_Financing_Framework_Final.pdf (publishing.service.gov.uk)