Initiative will advance the UK’s Paris Agreement targets by serving as a “one-stop shop for world-leading climate science, and for capital.”

UK Chancellor, Philip Hammond, has announced plans to launch a Green Finance Institute (GFI), through funding from both the UK government and the City of London Corporation. The initiative aims to help the UK reach its climate targets under the Paris Agreement by developing and promoting investment in the green finance market, while bolstering the future of the UK’s financial services sector. According to the Chancellor, the establishment of the GFI will mean that “firms from across the world can access our one-stop-shop for world-leading climate science, and for capital.”

The move reflects recommendations from the Green Financial Taskforce that were published in a March 2018 report. In the report, the Green Financial Taskforce suggested establishing a specific institute with the purpose of promoting green finance in order to expedite and enhance sustainable finance in the UK.

The Global Commission on the Economy and Climate Change has estimated that approximately US$93 trillion of green infrastructure investment will be required globally from 2015 to 2030, in order to reach the Paris Agreement climate change targets. The Chancellor noted the UK’s important role in facilitating the international green market. He said the UK is “already leading the charge,” having raised 78 green bonds valued at US$24.5 billion across seven currencies. Other European cities that have actively promoted green finance include Amsterdam, Frankfurt, and Paris.

On a global scale, the green bond market increased by almost 80% from 2016 to 2017, meaning the total value of green bond issuances rose to US$155 billion. The UK government has previously emphasized the significance of international interest in emerging markets where green finance demand is increasing at a significant rate. This means that market participants can expect greater emphasis to be placed on green finance, as it becomes more mainstream.

This blog was prepared with the assistance of Olivia Featherstone in the London office of Latham & Watkins.