Mobilising Green Investment 2023: Importance for the Tech Sector

UK Green Finance Strategy: Mobilising Green Investment March 2023

On the newly branded ‘Green Day’ the Government has released several strategy papers, including ‘Mobilising Green Investment’ with a focus on the Financial Sector, Net Zero and Biodiversity Loss. The Strategy is branded as a policy blueprint for seizing opportunities, mitigating risks and enabling capital flows under the climate change agenda. Making the UK the world’s first Net Zero Aligned Financial Centre is the headline goal of this strategy.

The Strategy comes with 5 Key Objectives

1. UK financial services growth and Investment
2. Investment in the green economy
3. Financial stability
4. Incorporation of nature and adaptation
5. Alignment of global financial slows with net zero.

These strategic objectives refer to several areas we have been advocating for on behalf of the tech sector, namely:

• the need for more venture capital in climate tech solutions,
• channelling of private investment in climate resilience and nature recovery,
• recognition of the financial cost of inaction on climate change (£110bn by 2050), and
• the incorporation of both climate and nature considerations into the green finance policy framework.

We are pleased that the Government has recognised the important opportunities that the net zero transition presents to the UK economy, and the leadership position that the UK could occupy if we inject serious resources into green technologies early.

Aligning the Market

The strategy outlined an approach enable the market to align with the UK climate and environmental goals. As well as the mobilisation of capital towards sectors and technologies required in the net zero transition, there is also support for the development of market tools to provide transparency in the financial sector over environmental metrics. This is a real boost for the tech sector and those companies looking at improving the quality of ESG investments.

The Government will be launching a call for evidence on Scope 3 emissions reporting which we will be keen to feed into, as technology providers are essential in this field of carbon accounting and the UK holds a lot of expertise here. There will also be an update to the Environmental Reporting Guidelines which we will keep an eye on.

There are further promises on the delivery of a UK Green Taxonomy, with a consultation on the Taxonomy in Autumn 2023. The Government is proposing nuclear as a key technology in the net zero transition.

Investment Opportunities

The Government reiterated its net zero financial commitments announced in the autumn 2021 Spending Review, 2022 Autumn Statement and 2023 Spring Budget, adding up to around £56Bn of domestic investment. In addition to this Strategy paper, Powering Up Britain was released today which announces a plan to grow green investment more widely, including for CCUS, Hydrogen, Great British Nuclear and Great British Insulation. The Government also plans to publish a series of Net Zero Investment Roadmaps throughout 2023.

There are also localised plans for net zero investment focussing on Local Net Zero Hubs, a Local Investment in Natural Capital programme and Investment Zones. The UK Infrastructure Bank, British Business Bank, UKRI and UK Export Finance are all cited as enabling this local action. The Green Finance Institute are going to be supporting the Government on exploring ‘Blended Finance’ models.

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techUK will spend the coming days unpacking the strategy papers from Green Day and highlighting areas of interest and importance to the techUK membership.