Peers for the Planet
The critical role of the financial sector to UK climate leadership and competitiveness
As the Financial Services and Markets Bill makes its way through the House of Lords, cross-party Peers were briefed by financial sector experts on the aims of the Bill and the opportunity it presents to deliver on the Government’s commitment to making the UK the world’s first net zero-aligned financial centre.
Peers heard how:
The Bill presents a critical opportunity to ensure the UK sets the right post-Brexit framework for the UK’s financial sector and support green investment flows.
There is a need to renew momentum in climate leadership – especially in this area, as the UK has a vital role to play as one of the biggest financial centres and what we do matters globally.
Being competitive is not seen as the same as deregulation, as investors see stable, predictable regulation as an attractive reason to do business in the UK.
Strong regulation and policy certainty has opened up investment flows for EVs and we now need to get investment flowing across other important areas of the real economy including in energy efficiency, aviation, agriculture and energy intensive industries.
While the Bill includes a new regulatory principle to encourage regulators to ‘have regard’ to climate goals, it does not contain other levers to support net zero and nature. The sector has expressed disappointment that provisions are not commensurate with the challenges and opportunities that tackling the climate crisis and restoring nature presents.
There are concerns proposals to add new statutory objectives to ensure the finance sector contributes to economic growth may strengthen opposition to sensible climate legislation on short-termist international competitiveness grounds.
It was hoped that the bill would be used to strengthen corporate sustainable disclosure requirements - but provisions have not been included, with the government appearing to put these ambitions, and UK leadership in this area, on hold.
As the Bill commences its next stages in the Lords, Peers were reminded of the importance of the Bill in setting a framework to enable the financial sector to play its full and critical role in accelerating domestic and global progress towards net zero and nature restoration - and to help secure the UK’s position as a leading sustainable financial centre.