UK as a global centre for green finance

535.  The financial sector is not only crucial in making the transition to net zero happen, and in an efficient way, but the shift to green finance creates a growth opportunity that the UK is uniquely placed to take advantage of. London is already considered a leading hub globally for green finance - ranked first in the world, overtaking Amsterdam, according to a recent index.388

536.  At COP26 the UK government committed to the UK becoming the world's first net zero aligned financial centre. Government needs to set out a clear plan for how it will reach that target. The UK must build on its leadership in terms of setting clear standards, internationally aligned, to ensure robustness and trust in the system, and build confidence with investors (see also Pillar 1).

537.  To meet its aspiration of becoming the world's first net zero aligned financial centre, government should review how the UK can become more competitive in terms of green finance - akin to the recent Hill Review on competitiveness of listing rules but going beyond the stock exchange. This review should consider how the UK can become the most competitive financial centre for green and transition listings, capital raising and project financing. To facilitate this, the review should recommend how the UK can become a global hub for professional services (such as legal, accountancy and consultancy services); climate and nature data and analytics (building on the UK Centre for Greening Finance and Investment) and innovative product development (for example, sustainability linked products)

538.  This review should also capture the role of the London Stock Exchange - a key pillar of the UK's financial system, enabling companies to raise capital and investors to build their portfolios across a range of global markets. In order to encourage green securities issuance at the London Stock Exchange, the Government and Financial Conduct Authority should take the opportunity of the ongoing reform of the prospectus and listing regimes to review the rules to encourage integrity and growth in the market for green finance instruments, with the aim of supporting the net zero transition. To do this effectively, they will need to work with issuers, their advisors and other market participants including exchange and venues.

539.  This would support, and sit alongside, the comprehensive financing strategy (see Pillar 1) that looks at how the UK Government can leverage government investment, policies, and regulation to scale up private finance to deliver the UK's net zero enabled growth.

540.  Government has committed to an update to its Green Finance Strategy (GFS). It needs to deliver on this commitment and use that opportunity to bring together the numerous aspects of green finance and set out a clear, robust and ambitious approach to disclosure, standard setting, and scaling up green finance - including how it will meet the existing commitments to implement Sustainable Disclosure Requirements across the economy. The GFS should provide a clear, long-term plan for attracting capital to meet net zero ambitions, and how to maintain the UK's position as the leading green finance hub internationally and metrics for success.