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The Chancellor has outlined his ambitious roadmap to make the UK the first net zero financial centre at the COP26 climate summit. By 2023, firms will have to set out detailed public plans for how they will move to a low-carbon future, under the Glasgow Financial Alliance for Net Zero (GFANZ). These will be submitted to an expert panel to ensure they are not just spin, as Mr Sunak pledged to “rewire the entire global financial system for net zero”.
A coalition of finance groups led by former Bank of England governor Mark Carney said there was enough finance committed to keep global warming to 1.5C.
But leading figures have already criticised it.
David Barmes, senior economist at the campaign group Positive Money, said the focus was wrong as firms were still “pouring billions into environmentally harmful projects”.
He added: “We need public institutions rather than bank CEOs to lead the way in setting standards and delivering green investment.”
Hendrik du Toit, who heads London and Johannesburg-listed fund manager Ninety One, said: “If we stop all financing of what I would call dirty assets, then other forms of finance will come in, own them and not transition at all.
“That is the real risk.
Former Labour MP David Miliband added: “Writing cheques is the easy part and spending the money well is much, much tougher.”
And Shaun Spiers, executive director of environmental think tank Green Alliance, said that more UK public sector funding was needed.
He noted: “Private sector investment is vital, but it will be much easier to achieve on the back of serious investment by the Chancellor.”
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More than $130trillion (£95trillion) of private capital “is now committed to transforming the economy for net zero”.
Companies with shares listed on the London Stock Exchange must come up with net zero transition plans.
This could mean bank loans that could go to an oil field, or a coal mine, are diverted to renewable energy or to a mortgage product that subsidises highly efficient homes.
Bank bosses will also be expected to have tough conversations with their customers who want to build coal power stations, pulling funding in advanced nations now, and developing countries beyond the next decade.
But commitments will not be mandatory and shareholders will be left to decide how their businesses adapt to this transition.
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A taskforce set up by the Government will set the “gold standard” for the plans in order to guard against so-called “greenwashing”.
It will be made up of industry leaders, academics, regulators and civil society groups.
But the Government said there was “not yet a commonly agreed standard for what a good quality transition plan looks like”.
And although the plans will need to be published, the government said “the aim is to increase transparency and accountability” and the UK was not “making firm-level net-zero commitments mandatory”.
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