Ensure global financial institutions are properly incentivised to develop green finance offerings in the UK’s financial centre

Financial institutions will make the UK the centre of their green finance operations if the UK provides them with better incentives to grow a green finance business than other centres. For finance to be mobilised for wider economy firms to then generate returns for investors, policies, regulations and incentives need to be considered using a ‘systems thinking’ approach. Policies, regulations, grants, incentives, tax reliefs and/or blended finance solutions need to be optimised to generate demand for finance to flow from capital markets to companies and individuals implementing low carbon solutions. The capital must be channelled in a manner that is compatible with the financial regulations, policies, and stewardship duties that financial institutions are subject to.

For financial institutions looking to provide financial products and services into new asset classes, financial regulators need to understand and be ready to approve investments in new asset classes. Such approvals are not intended to apply discounts or underestimate risk levels for new asset classes, but rather ensure that financial regulators are in the position to make appropriate and timely decisions, by being well informed and in continuous dialogue with other policy makers and decision makers in the wider economy, where new asset classes are being created.

The UK needs to ensure:

  • Businesses that offer green and sustainable products are assessed and authorised at least as quickly by UK financial regulators as by regulators in other leading financial centres.
  • Businesses that offer green and sustainable finance are subject to internationally competitive tax regimes which provide certainty in tax rates, R&D tax credits, policy making, and administration.
  • Financial institutions can deploy as much capital to UK green infrastructure projects as possible. The UK should reform the Solvency II Risk Margin and Matching Adjustment to free up more investment capital for sustainable investment.

Ensure financial institutions have access to the right tools to develop green and sustainable finance products

Ensure financial institutions can sell high quality products to UK and global businesses who need green and sustainable finance

Ensure financial institutions developing green finance products have access to a thriving ecosystem of financial and related professional services businesses

Ensure global financial institutions are properly incentivised to develop green finance offerings in the UK’s financial centre