Financial sector is being stalled by the government’s ‘stop start’ approach to net zero

MPs have warned that the government are sending mixed messages on climate action which risks the financial sector’s net zero progress.

On Wednesday the Environmental Audit Committee (EAC) released a 70 page report that has outlined finding and recommendations following an inquiry net zero transition in to the financial sector.

The EAC said the “stop start” approach the government is taking and maintaining their ambitions then delaying policy initiatives may be sending mixed signals to the financial sector.

The Prime Minister said in September he will delay the ban on selling new diesel and petrol cars by 5 years to 2035 and then Rishi Sunak rowed back that 20% will be exempt from a new gas boiler ban.

Sunak argues that the government does not want to burden people with the high costs of going net zero given the current cost of living crisis.

However, the government has said they are confident they will meet net zero by 2050.

The EAC are urging the government to publish quarterly reports which will help ministers to stay on track to meet net zero.

The EAC also recommended that over a five year period the government introduces a Taskforce on Nature related Financial Disclosures (TNFD).

Philip Dunne, EAC chairman, said, “Globally, banks continue to pump trillions of dollars into fossil fuels, and simply put, we are not turning the dial fast enough to tackle the climate and nature crises.

“Enormous strides have been made in the last few years to champion a low carbon economy, but we’re at risk of this good work stalling through complacency.

“The UK should be proud of its long-held position in front of the peloton, with other governments following its lead.

“London is the number one financial centre for commitments to environmental improvements both directly in finance and across the wider economy.

“But this alone is not enough.

“At Cop26, the Government made ambitious commitments to make even greater progress in embedding climate and nature into financial decision making.

“The Government should implement swiftly its initiatives on mandatory transition plans, a UK green taxonomy, and carbon leakage mitigation measures.

“Any delay is likely to send mixed messages to the financial sector that the UK is wavering on its ambitions, as set out at Cop26, to become the first net zero-aligned financial centre.”

A Government spokesperson said, “This report fails to recognise the huge progress we’ve made in funding renewables, having attracted £200 billion in low carbon investment since 2010, with a further £100 billion expected by 2030 – powering up Britain and supporting up to 480,000 jobs.

“At this week’s Global Investment Summit, we also attracted nearly £30 billion worth of commitments to invest in a range of projects including renewables production, grid capacity and heat pump manufacturing.

“We were the first major country to publish a green finance strategy in 2019, which we are using to further strengthen our leadership in green finance and provide the financial backing for our energy security, net zero and environmental targets.”