UK Green Finance Initiative
The ECCT co-hosted a Special Lunch on the topic "UK Green Finance Initiative - Turning ambition into action" together with the British Office Taipei and the British Chamber of Commerce Taipei (BCCT). The guest speaker, Sherry Madera, Special Adviser for Asia, City of London Corporation, introduced the Green Finance Initiative (GFI).
The initiative, established in January 2016, is the City of London Corporation's leading industry body in UK green finance. It is chaired by former City of London Lord Mayor, Sir Roger Gifford. The initiative brings together international expertise from across the financial and professional services sector and aims to: Provide public and market leadership on green finance; advocate for specific regulatory and policy proposals that might enhance the green finance sector worldwide and promote London and the UK as a leading global centre for the provision of green financial and professional services. Its members include leading international banks and accounting firms.
The UK is a global project finance leader. Close to 8% of global infrastructure financing was generated through the UK in 2016 and the UK was the second-largest issuer of global project finance bonds, after the US, issuing US$4 billion in bonds in 2016. UK renewable energy project finance totalled £16.7 billion in 2015, an increase of 37% from the previous year.
According to Madera, the green bond market should reach US$1 trillion per year by 2020. While some of the rise in issuance and demand can be attributed to efforts by corporations to meet Environmental, Social And Governance (ESG) targets, the economic case for green investments is improving as yields on certain investments may already be better than so-called "plain vanilla" bonds. The speaker cited the example of some large pension funds demanding divestment from "dirty" assets like coal and oil in favour of low carbon businesses.
A record £6 billion was invested in UK offshore wind farms in 2015, representing a 33% increase on the £4.5 billion invested in 2014. In September 2017 SSE PLC issued a €600 million green bond on the London Stock Exchange, the largest ever green bond by a UK company, to fund onshore wind farming. The same company is now planning three offshore wind projects.
The UK is not alone in promoting green finance. China has the largest green bond market and other markets are catching up. Taiwan has drawn up green bond guidelines. Most of the action in green finance is being driven by markets, rather than governments.