Energy Secretary Ed Miliband outlines plans to support banks and large companies in developing climate transition plans.
- Government welcomes views on supporting banks and large companies to set out their climate transition plans
- Energy Secretary announces plans will "help unlock billions in clean energy investment" and grow the economy
- delivers on commitment to make the UK the "sustainable finance capital of the world" as part of the Plan for Change
To help "unlock billions in clean energy investment", the Energy Secretary Ed Miliband has today outlined plans to support banks and large companies in developing climate transition plans when addressing the Climate and Innovation Forum as part of London Climate Action Week (25 June).
The UK is consistently ranked first in the world for sustainable finance, and 70% of FTSE 100 companies have already voluntarily developed many of the key elements of a transition plan. Widespread transition planning will help provide long-term certainty and clarity to help scale the sustainable finance industry as part of our modern industrial policy.
The government's clean energy superpower mission is already delivering economic growth, with net zero sectors growing 3 times faster than the overall economy last year, according to CBI Economics. Since July, over £40 billion of private investment has also been announced into the UK's clean energy industries - creating good jobs for working people and driving long-term growth.
As part of the government's Plan for Change, the government wants to help stimulate billions of pounds a year of private investment to deliver the government's clean energy superpower mission and make the UK the "sustainable finance capital of the world".
To support this growth, the government will take forward recommendations from last year's Transition Finance Market Review to consult on transition plan requirements in order to catalyse the growing transition finance market. The design of any future transition plan requirements will be aligned with the Prime Minister's commitment to reduce regulatory compliance costs by 25%.
Energy Secretary Ed Miliband said:
This government is determined to make the UK the sustainable finance capital of the world as we seize the huge economic opportunities provided by clean energy.
Through our clean energy superpower mission and industrial strategy, we can win this global race and accelerate investment into these sectors - growing the economy, turbocharging the transition to net zero and delivering on our Plan for Change.
Our plans will transform our leading financial services sector into a global hub for green investment.
Minister for Competition and Markets Justin Madders said:
We want to work with businesses to develop a "common sense" sustainable reporting framework that is transparent, clear and proportionate for those investing in the UK.
These measures will enhance competition in the sustainability assurance sector, helping to deliver on our Plan for Change and kickstart economic growth.
Rt Hon Lord Alok Sharma KCMG, Chair of the UK Transition Finance Council said:
A clear message from the Transition Finance Market Review was that high quality disclosure and information are vital for investors and a pre-condition to a flourishing sustainable and transition finance market.
I therefore very much welcome the government taking forward recommendations from the Review to consult on corporate transition plan requirements.
The UK can become the pre-eminent global financial centre for raising transition finance, but this is a time-limited opportunity, and that is why it will be vital to move quickly from consultation to implementation.
The government is publishing 3 consultations on:
- how to take forward the government's commitment on transition planning to support the market to invest in sectors that will deliver the clean energy superpower mission
- new UK Sustainability Reporting Standards to provide clear, comparable information for investors on sustainability related financial risks and opportunities to enable them to make informed investment decisions
- the development of a voluntary registration regime for the providers of assurance of sustainability reporting, supporting growth in this important sector
Transition planning means businesses set out a roadmap that outlines how they intend to adapt and transform their operations, strategies, and business models to align with their climate goals.
This is a vital part of the government's commitment to secure Britain's position as the sustainable finance capital of the world and will help businesses and investors seize the opportunities from the clean energy transition.
A recent survey of financial institutions conducted by South Pole found that 84% of UK-based financial institutions find companies with transition plans more attractive to invest in.
Supporting British industry and creating good, skilled jobs up and up down the country is core to the government's industrial strategy and plan to grow the economy, ensuring businesses can take advantage of the transition to new low carbon technologies as they reduce their emissions. This will allow UK industry to remain competitive globally and support the millions of manufacturing jobs in regions across the UK - as well as future-proofing existing sectors, and increasing economic resilience to climate impacts.
Alistair Phillips-Davies, Chief Executive at SSE plc said:
SSE has long been a firm supporter of credible, transparent transition planning. As an early adopter of climate transition plans, we've seen first-hand how they can build investor confidence and accelerate progress toward net zero.
We welcome the UK Government's ambition to become the sustainable finance capital of the world and fully support the work of the Transition Plan Taskforce and the Transition Finance Market Review.
As the UK's clean energy champion, we want to see the UK remain the best place in the world to attract transition finance and deliver the investment needed for a just and ambitious energy transition.
Rachel Solomon Williams, Executive Director of the Aldersgate Group, said:
The Aldersgate Group welcomes today's announcement as a significant step forward in creating a first-in-class green regulatory framework.
Using the feedback from these consultations to develop clear financial guardrails will help strengthen the transparency, interoperability, and credibility of climate-related financial disclosures. This is essential to support the measures in the government's Modern Industrial Strategy, unlocking private sector investment in the UK's low carbon economy.
We are particularly pleased to see the consultation on how best to take forward the government's commitment on transition planning. Climate transition plans are a vital tool to help real economy companies integrate climate into strategic and operational decision-making, while also enabling financial institutions to align capital allocation, stewardship, and risk management with the transition to net zero.
James Alexander, CEO of UK Sustainable Investment and Finance Association (UKSIF), said:
We welcome the government's commitment to bringing forward the consultation on climate transition plans for banks and large companies. These are essential for enhancing growth and global competitiveness as the UK and other countries decarbonise.
Further dialogue between the government and industry on the UK Sustainability Reporting Standards is also very encouraging. We look forward to ministers taking forward these commitments, which will help future-proof our economy over the coming years.
Heather McKay, Programme Lead, UK Sustainable and Resilient Finance at E3G, said:
The delivery of the government's growth mission relies on ensuring Britain is a world-class destination for green and transition finance.
The clean economy is our ticket to a high-growth future, and credible transition plans - as part of a future-fit regulatory regime - are fundamental to unlocking the investment required to seize this opportunity.
The release of this highly anticipated consultation package is a welcome step towards turning this vision into reality.
Claudine Blamey, Chief Sustainability Officer at Aviva, said:
We welcome this consultation as an important next step in understanding how transition planning is rolled out across the UK economy, helping businesses understand the steps needed to transition, supporting a greener, more prosperous future.
Andrew Ninian, Director for Stewardship, Risk and Tax at the Investment Association, said:
We want the UK to remain at the forefront of sustainable finance. Ensuring that reporting standards are focused on the issues that impact the financial performance of companies is vital to achieve this.
Transition planning should enable investors to understand how climate risks and opportunities affect a company's value and how they are adapting their business strategy to reduce their climate impact, in order to provide a sustainable future and grow the UK economy.
International comparability is also key, and with companies already preparing for reporting in line with ISSB, endorsing the standards will allow investors in UK companies to fully understand their long-term sustainability risks and simplify reporting expectations in the UK and globally.
Ian Bhullar, Director, Sustainability Policy, UK Finance said:
The financial services industry backs proportionate, internationally aligned sustainability reporting. Many firms have already published transition plans and use their customers' plans to make low-carbon financing decisions.
Better reporting by a range of companies will provide information that lenders and investors can use to increase green finance flows. UK Finance welcomes these consultations and will work with government to ensure they support growth in the UK economy.
Faith Ward, Chief RI Officer, Brunel Pension Partnership said:
I hugely welcome the HMG announcements today. Having been deeply involved in supporting the International Sustainability Standards Board and Transition Plan Taskforce, I am delighted to see the UK take this vital step to regain its leadership role as global centre for green finance.
Investors want to allocate capital to growing businesses that are taking action to address climate and sustainability risks - and that are looking to business opportunities so that they deliver financially over the long term. They need globally consistent reporting on climate and sustainability actions, alongside critical insights into corporate plans for the transition.
Bruno Gardner, Head of Climate Change and Nature, Phoenix Group said:
As a long-term investor, policy developments that provide greater certainty around the net zero transition enhance the UK's role as the leading centre of sustainable finance.
Transition plans are critical to helping investors like Phoenix Group manage the risks of climate change and direct capital towards companies that are best equipped to navigate the transition to net zero, ensuring the best outcomes for our customers.
We welcome all three consultations and the government's engagement with the private sector, which is a significant step towards giving investors greater policy certainty and enabling us to being net-zero by 2050.
Notes
DESNZ analysis of Bloomberg New Energy Finance (BNEF) data showed that global investment into low carbon sectors amounted to £1.6 trillion in 2024, with total investment in UK low carbon sectors representing 1.8% of GDP, the second highest share within the G7.
