Today is finance day at COP26. Rishi Sunak, Chancellor of the Exchequer, made a speech earlier that has been widely reported in the press. The full text of the speech is in the attached link, but three remarks stand out:
1. The UK is seeking to support meeting the target of $100bn of climate finance to developing countries by (i) committing £100m to the recently announced Taskforce on Access to Climate Finance, making it quicker and easier for developing countries to access the finance they need; and (ii) supporting a new Capital Markets Mechanism, which will issue billions of new green bonds in the UK, to fund renewable energy in developing countries.
The UK capital markets have not been, traditionally, a source of funding for development projects of any asset class (renewable energy or otherwise) in developing countries. Details of this new mechanism are therefore awaited.
2. The "rewiring of the Global Financial System to Net Zero" with (i) better and more consistent climate data (ii) sovereign green bonds (iii) mandatory sustainability disclosures (iv) proper climate risk surveillance; and (v) stronger global reporting standards. This is in addition to previous announcements making it mandatory for businesses to disclose climate-related financial information.
This data will allow compliance by corporates with net zero to be assessed and verified.
3. The UK will become a "Net Zero Aligned Financial Centre". It will be mandatory for firms to publish a clear, deliverable, plan setting out how they will decarbonise and transition to net zero.
The publishing of a plan will therefore be mandatory, compliance with that plan will not be mandatory, at least for now, but compliance and non compliance will be assessable and public information.