A report to Government by the Green Finance Taskforce

by Adrienne Lawler
July 5, 2019

Accelerating Green Finance

Facts

$25.3

Green bonds listed on the London Stock Exchange have raised in excess of $25.3 billion in seven currencies.

£100bn

Investment in the UK’s clean energy sector has surpassed £100 billion since 2004, representing 12.6% of all new investment in clean energy for the EMEA region.

$167.6bn

2018 saw $167.6 billion in labelled green bond issuance (Source: Climate Bonds Initiative “The State of the Market 2018 report” March 2019).

£7bn

16 Renewable funds listed on LSE with an aggregate value of over $7bn.

90

There are 90 Green Bonds listed on the London Stock Exchange in seven different currencies, including the first CNH and INR-denominated green bonds. (Source: LSEG December 2017)

$10bn

There are 38 green companies which have raised $10 billion combined in London.

33%

Output from renewable sources generated an estimated 33% of the UK total generation (Source: Carbon Brief).

98

The UK Green Investment Bank has backed 98 green infrastructure projects, committing £3.4 billion to the UK’s green economy into transactions worth £12 billion.

€118

121 UK energy projects have been funded visa crowd funding raising €118 in total across 5 energy crowd funding platforms, providing an average return of 7.36%

121

UK energy projects have been funded by crowd funding. (Source: IEFE May 2016)

How we manage the world’s natural environment is one of the most pressing issues of our time, associated with climate stress, pollution and a prodigious need for clean energy. Until recently, however, this has tended to be seen in terms of cost rather than investment and return, of risk management rather than forward-looking risk mitigation. In particular, the global challenge of raising the trillions needed to meet the two degrees or less scenario agreed in Paris 2015, are as great as the consequences appear grave if we don’t. The sheer scale of capital required dictates that this cannot be driven through either public or private sectors working alone – we need an international alignment of interests, incentives and policies. That is why we set up the London Green Finance Initiative in 2016, to bring these groups together and see where the UK’s great financial acumen could make its contribution. All finance concerns intermediation between savers and borrowers – and pricing and managing risk accordingly. This should ensure that capital is allocated efficiently and productivity is duly maximised. When it comes to green finance, it is clear that this process is at an early stage of development and shows huge potential for growth. However, the risks implied in climate science modelling are not yet being transposed fully into financial models. Climate-related risk is understood to exist by all financial actors but it is not yet priced into long term financial thinking. Short time horizons in investment decisionmaking, information asymmetries, misaligned incentives, financial mis-education and perhaps most crucially, a lack of available data, co-conspire to under-allocate capital. It is this value chain that must be untangled.

To read the full report from The Green Finance click here

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