LONDON, Nov 3 (Reuters) – British finance minister Rishi Sunak will tell companies on Wednesday to set out plans by 2023 for a transition to a low-carbon economy, as part of steps to make Britain the world’s first net-zero financial centre.
These plans must include targets to mitigate climate risk, interim goals between now and 2050, and measures to meet them, the finance ministry said ahead of a speech by Sunak to the UN COP26 climate conference in Glasgow.
However, there will be no mandatory net-zero commitments for firms or a ban on investments in carbon intensive activities, the ministry said. Instead, investors would have to determine if companies’ plans were adequate or credible.
“There will be new requirements for UK financial institutions and listed companies to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards to a net zero economy by 2050,” the ministry said.
A new task force will offer a model for transition plans in an attempt to avoid ‘greenwashing’.
Britain will also publish next year proposals setting out how the financial sector should transition to net zero by 2050.
Sunak welcomed a planned announcement from the Glasgow Financial Alliance for Net Zero that over $130 trillion of private capital, equivalent to 40% of the world’s financial assets, would now be aligned to climate goals of limiting global warming to 1.5 degrees Celsius, the ministry said.
This would help “rewire the entire global financial system for net zero”, Sunak said in an extract of his speech.
The alliance is a grouping of more than 160 financial firms chaired by former Bank of England Governor Mark Carney.
Britain will seek to address barriers to finance faced by developing countries with a series of new green initiatives, including 100 million pounds ($136 million) to help developing countries get funding for climate plans, the ministry added.
Sunak expects a $100 billion climate finance target for the most vulnerable countries will be met by 2023, aided by a new financing mechanism to boost investment in clean energy like solar and wind power in developing countries.
Britain will feed returns from its investments in Climate Investment Funds, a project to help developing countries backed by lenders like the World Bank, into the planned new mechanism for issuing billions of pounds of green bonds for clean energy projects, the ministry said.
Reporting by Huw Jones; Editing by Giles Elgood
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