A Fool-Proof Guide to the Green Finance Strategy

On Tuesday 2nd July 2019, the UK government announced a new strategy named the Green Finance Strategy, aligning with London’s inaugural Climate Action Week 2019. This strategy will be looking at how the finance sector can move alongside the new law declared for the UK to achieve net-zero emissions by 2050.

The most important points to come from the government release include: 

  • £5 million has been set up in the Green Home Finance fund which looks to help homeowners receive energy efficiency grants and green mortgages when making home improvements. This will help the development of Green Mortgages which will incentivise homeowners to make energy efficient retrofits to their properties. Currently there is one bank (Barclays) offering Green Home Mortgages to those who are buying a new build property which is energy efficient from one of their partner house builders. The home needs to have an efficiency in bands A or B which would then allow you to get lower rates on mortgages. MoneyExpert has said Barclays want to extend this to houses purchased with all major builders by the end of the year. But, with this new fund this could aid Barclays in developing this and encourage more banks to encourage similar offerings - watch this space!

Developing countries are susceptible to extreme weather events, worsened by climate change

Developing countries are susceptible to extreme weather events, worsened by climate change

[The Green Finance Strategy] will help ensure our financial system is robust enough to respond to the profound changes that climate change and the transition to a clean economy bring with them
— The Secretary of State for Business, Energy and Industrial Strategy and the Chancellor of the Exchequer

To achieve these strategy points the government has split the strategy into 3 main areas: Capturing the Opportunity, Financing Green and Greening Finance.

Greening Finance will ensure any financial decisions made incorporate the financial risks and opportunities from climate issues. The financial risks are split between the physical risk (changes in financial performance of companies due to changes in water availability, water quality, extreme temperature changes and food security), and transition risk (how the move to low carbon will require vast policies and changes in the market). Importantly for the decarbonisation of power, the government aims to partner with those in the private sector to drive out the use of coal power and change to sustainable supply chains.

Financing Green will look at increasing finance to support the delivery of UK targets and laws as well as international goals and strategies. This will look at improving the access to green investment and look at the barriers in the market to taking on renewables. The government will also release a package of measures to address home energy efficiency and determine how businesses and landlords can disclose operational energy use.

Capturing the Opportunity will ensure that financial services work with opportunities coming from the release of new green services and products.

On 3rd July 2019 - a day after the Green Finance Strategy was announced - HSBC launched their green finance for UK small-medium businesses. This includes a Green Loan which will enable these businesses to achieve sustainable initiatives. 

To find out what current grants and funding are currently available click here.

Sarah Levett