Government should ensure financial institutions based in the UK have access to the following, so that they can make the world’s best green finance products:
Large capital pools
UK financial institutions need access to capital to support green investments. The financial risks of emerging low carbon technologies like hydrogen are currently deemed too high by private investors.
To unlock capital flows, the UK government should:
- Deploy and scale up well-designed incentives, such as business models and tax reliefs to attract private investment, and work with UK Infrastructure Bank, British Business Bank, and financial and related professional services firms to co-create blended finance solutions designed to de-risk and scale up low carbon investments. A well-known business model which offers price stabilisation for investments is the Contract for Difference scheme, which has supported the development, scaling up and establishment of offshore wind farms. With incentives, blended finance should be expanded to riskier technologies that need to be deployed as large infrastructure projects. Blended finance is typically used to help projects which are not ‘investment grade’ and yet to become commercially sustainable, by initially using some public capital and/or guarantees to attract larger volumes of commercial finance to rapidly scale up total capital flows for low carbon infrastructure.
- Boost UK Infrastructure Bank (UKIB) funding to help it back more low carbon technology projects at scale.
- Implement its investment screening regime in a way that ensures that global investors continue to invest in UK green and sustainable finance.
The world’s best green and sustainable finance talent
- The UK needs a strong domestic green finance talent pipeline. Government should continue to support the Green Finance Education Charter under which UK professional training bodies committed to embedding green finance and sustainable skills development in their courses.
- The UK needs to make sure financial institutions can bring in international green finance experts for short term assignments by removing the requirement for sponsors to acquire intra company transfer (ICT) visas.
- International green finance graduates who study in the UK should be able to work here and be upskilled by their employers. The time that international workers spend under the Graduate Route should qualify as continuous residence, and the Home Office should allow businesses to notify them about promotions of international workers via a simple immigration Sponsor Management System.
High quality infrastructure
Businesses rely on the UK’s infrastructure as they develop and sell their green products. The UK needs to upgrade its broadband connections, ensure that the subsea cables that enable cross-border data flows are secure, and ensure that the UK’s core infrastructure (airports, trains, tube) is fit for purpose.