Decarbonisation of the UK economy and green finance inquiry relaunched
24 July 2020
The Treasury Committee has announced today that it is relaunching the inquiry to seek additional written evidence on how and whether the UK’s response to coronavirus should take the Government’s net zero carbon emissions by 2050 target into account.
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The questions that the Committee wants to receive submissions about are below in the terms of reference.
The Committee would like additional evidence to address whether HM Treasury’s support packages to business should distinguish between companies based on how much they pollute, should HM Treasury be directly funding green infrastructure as part of its coronavirus spending package, and what policies should HM Treasury change due to coronavirus in order to facilitate the transition to meeting net zero.
Commenting on the announcement, Rt Hon. Mel Stride MP, Chair of the Treasury Committee, said:
“The Committee has received a great deal of evidence since launching this inquiry over a year ago. But with the impact on the economy of coronavirus, clearly much has changed.
The Climate Assembly’s report published last month said that post-lockdown steps to aid economic recovery should drive progress to achieve net zero.
So now is the time to ask whether the Government can seize the opportunity presented by the crisis to further green the economy to achieve net zero by 2050.
Whether the level of HMT support should depend on how much companies pollute, or if it should directly fund green infrastructure, are some of the issues that we would like evidence on.”
Terms of reference
The original terms of reference are set out below. The Treasury Committee is calling for additional written evidence addressing the following questions:
- Should the Treasury’s support package to business distinguish between companies based on how much they pollute?
- Should the Treasury be directly funding Green infrastructure as part of its Coronavirus spending package?
- Are there any green related policies that the Treasury should change or commence due to the Coronavirus in order to facilitate the transition to meeting Net Zero?
- In which ways will the new economy post-Coronavirus allow the Government to change the way it finances meeting the Net Zero Target?
- Are there outcomes from the Coronavirus that will enable the Treasury and HMRC to meet the Net Zero target more easily?
Original terms of referenceThis inquiry will cover:
- The economic opportunity that decarbonisation presents for the UK, and the potential of the green finance sector
- HMT’s strategy in facilitating clean growth and its response to the CCC’s net-zero recommendations
- The role of the Spending Review in facilitating net-zero
- The role that financial services firms are currently playing in financing the transition
- The 'green' financial product landscape and their associated regulatory environment.
Some of the key questions the Committee will consider in this inquiry include:
- The economic opportunity
- What economic costs and benefits does decarbonisation present for the UK?
- What benefits can a growth of the Green Finance sector deliver for the UK, and does the UK hold a competitive advantage in this space?
- How might HMT deliver a regionally balanced and ‘just’ transition across the UK?
- HMT's strategy
- What is HMT’s current strategy, and approach to, UK decarbonisation, and is it fit for purpose?
- How does HMT work with the Clean Growth Strategy and government departments to support decarbonisation? Is this working well?
- How should HMT’s approach evolve to ensure the Government meets the legally binding net-zero target?
- What role should the 2020 Comprehensive Spending Review play in UK decarbonisation? What projects or measures should receive additional funds through this process?
- What role do UK financial services firms currently play in the decarbonisation of the economy (for example, through stewardship, capital allocation to green projects, green financial products)?
- What more can they do? What steps have UK banks, asset managers, and pension funds taken to ‘green’ their business models, investments strategies and balance sheets, taking in to account climate and transition risks?
- Are there any barriers (regulatory or otherwise) preventing financial services firms from delivering green finance or investing in ‘green’ assets? What prudential risks does climate change pose?
- What is the Financial Conduct Authority and the Prudential Regulation Authority doing to support decarbonisation and a ‘greening’ of the financial system?
- What expectations do (and should) they place on regulated firms about their role in the transition through their policy and supervisory activities?
- What is the consumer demand for ‘green’ financial products?
- Are there a range of accessible options available to consumers seeking to source ‘green’ financial products across the product suite (for example, mortgages, bonds, investment products, savings accounts, loans)?
- Do certain instruments dominate the green finance landscape, and if so, why? Do accompanying documents for ‘green’ instruments (bonds, funds, etc) articulate why and how the composite holdings within that instrument are ‘green’? Are obligations placed upon listed companies, to report their carbon emissions, to inform fund composition?
- Does the current advice and KYC process effectively facilitate a consideration of sustainability preferences?