Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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The Exchequer Secretary to the Treasury (James Cartlidge)
It is a real pleasure to serve under your chairmanship, Mr Bone. I congratulate the hon. Member for Sheffield, Hallam (Olivia Blake). This is an incredibly important subject and a very timely debate. I thought she delivered her speech very clearly and eloquently and made some very important points, and I will do my best to respond to the various points that have been made by her and other colleagues. I thank them all for contributing to what has been a thoughtful debate.
I will just give a couple of personal perspectives. I had the privilege to represent the Treasury at the COP finance day. It was pretty much my second week in the job. It was striking that in discussions with financial counterparts, three of them raised the fact, without my prompting—just by coincidence—that their nations had raised their green sovereign bonds, or the equivalent instrument, in the UK. That is a real testament to the strength of the City. I think it was Mexico, Uruguay and Egypt, which of course was our host. That feeds into the point made by the hon. Member for Kilmarnock and Loudoun (Alan Brown), who spoke for the SNP: this should be seen as an economic opportunity. The journey to net zero goes hand in hand with strengthening our economy and taking advantage of economic opportunities. The hon. Member for Strangford (Jim Shannon) quite rightly referred to the green industrial revolution. I will go as far—[Interruption.]
Mr Peter Bone (in the Chair)
Order. I am sorry to interrupt the Minister, but the sitting will be suspended; we have a number of votes. If people return as soon as possible after the last vote, we will reconvene.
James Cartlidge
To cut straight to the chase—given I was interrupted by the vote—we published the green finance strategy in 2019 and the “Greening Finance: A Roadmap to Sustainable Investing” policy paper in 2021. Together, they add up to an ambitious and detailed agenda on which we are making significant progress.
The hon. Member for Bristol East (Kerry McCarthy), who spoke for the Labour party, said that the market needs a clear steer—just as I need to get my breath back. To be clear to her, a central tenet of our approach has been to ensure that every financial decision takes climate change into account. This year, the UK made good on our commitment to introduce a mandatory Task Force on Climate-related Financial Disclosures, or TCFD. This is the first country to make a commitment to do so and we have now delivered. As set out in the greening finance roadmap, we will build on those rules with new SDR rules, the aim of which is a comprehensive, streamlined and co-ordinated reporting framework. SDR will incorporate international sustainability standards—I’m sorry, but I have completely lost my breath.
Mr Peter Bone (in the Chair)
Order. I am grateful to the Minister for running back—I know what it is like. We are pushing things a little earlier to help with later debates. My saying that might have given the Minister enough time to catch his breath.
James Cartlidge
You are very kind, Mr Bone. As I was saying, SDR will incorporate international sustainability standards, including the global baseline standards being developed by the International Financial Reporting Standards Foundation.
The SNP spokesman, the hon. Member for Kilmarnock and Loudoun, raised the subject of transition. A central element of SDR is transition plans for financial firms. We recognise the importance of requiring firms to set out how they will adapt as the world transitions towards a low-carbon economy. Transition plans form a key part of the UK’s ambition to become the world’s first net zero-aligned financial centre, and will see organisations setting out how they plan to adapt as the world transitions to a low-carbon economy. That is why we launched the transition plan taskforce in May to create the gold standard for transition planning. I was pleased to announce at COP a few weeks ago the launch of the TPT’s disclosure framework and implementation guidance consultation. The documents are a huge step and set out clear recommendations for the preparation and disclosure of high-quality transition plans.
Let me turn to the important issue of stewardship. More than 70% of the UK public say they want their investments to avoid harm and achieve good for people and planet. In 2020, on average UK savers put almost £1 billion a month into responsible investment funds—a clear sign that a shift is under way. As made clear in “Greening Finance: A Roadmap to Sustainable Investing”, the Government expect the UK’s pension investment sectors to act as responsible stewards of capital.
The FCA’s consultation on SDR and investment labels includes proposals to promote integrity and trust in the market, protect consumers, allow consumers to better compare products and reduce the risk of what my hon. Friend the Member for Rother Valley (Alexander Stafford) quite rightly referred to as greenwashing. In November, the FCA convened the vote reporting group to develop a more comprehensive and standardised vote disclosure regime.
On the specifics of the greening financing programme, Members will know that the UK kick-started a greening finance programme with a record-breaking debut sovereign green bond last September. The UK plans on raising an additional £10 billion from green gilts this financial year, with transactions worth £6 billion so far. That means we have raised more than £22 billion from green gilts and retail green savings bonds since September 2021, helping to finance projects to tackle climate change and other environmental challenges. The world sees the progress we have made. There is a lot of talk about the competitiveness of the City and UK financial institutions. Just last month, London was once again ranked one of the leading centres in the world for green finance in Z/Yen’s global green finance index.
Let me turn briefly to the UK Infrastructure Bank, for which we are legislating at this very moment to put it on a sound footing. The bank has £22 billion of capital to invest in infrastructure that supports two objectives: helping to tackle climate change and levelling up the UK. Based on the 10 investments it has announced so far, UKIB estimates it has already crowded in £4.5 billion of private investment. Notably, its first private-sector deal was to support a £500 million subsidy-free solar fund—a good example of exactly what we are setting out to achieve.
Of course, it is about not just tackling climate change but the key issue of nature. The Government have invested significantly in financial sector transparency and the disclosure of nature-related financial risk. The UK is the largest financial backer of the taskforce on nature-related financial disclosures and supports its work developing a framework for financial institutions and corporates to assess and report on their nature-related dependencies, impacts and risks.
Let me turn to some of the points raised by colleagues. My hon. Friend the Member for Rother Valley—we were right not to ignore him—made a good contribution, and I note his previous work with WWF before becoming an MP. He is right about green taxonomy—it must be about quality not speed—and I look forward to receiving a copy of his report. The Government will be engaging with the market on the design of a policy approach to guide investors on how they can best support the transition to net zero, and the value of taxonomy rests on its credibility as a practical and useful tool for regulators, companies and investors. It is important that we learn from the approach taken in other jurisdictions and take the time to get this right for the UK and the market.
Alexander Stafford
I invite the Minister to attend the all-party group meeting to discuss the report with our members as a priority.
James Cartlidge
I would never say to my hon. Friend that he should be ignored. On that basis, I will certainly consider his invitation, alongside reading his interesting report.
The hon. Member for Sheffield, Hallam raised the issue of insulation. Our new £1 billion ECO+ scheme will see hundreds of thousands of homes receiving new home insulation worth approximately £310 a year each. Of course, the autumn statement made significant and ambitious commitments on energy efficiency.
The hon. Members for Bristol East and for Strangford spoke about charging points. Since 2020 we have committed £1.6 billion on charging points, but I know that people want to see us go further and faster, and we are making huge progress on the transition to electric vehicles.
The hon. Member for Strangford and my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), who is not in his place, mentioned the important issue of deforestation. The Environment Act 2021 includes due diligence requirements for companies to check and eliminate illegal deforestation, and a significant pledge was made at COP26. To be clear about financial services, the UK is focused on transparency with regard to deforestation and has included that very point about disclosing that sort of activity in our disclosure framework, as part of the taskforce on nature-related financial disclosures. That is the key point about the financial services sector: it is all about disclosure. [Interruption.]
Mr Peter Bone (in the Chair)
Order. I am afraid the sitting is suspended. It will be great to see you all back here in 15 minutes.
James Cartlidge
It has been an interesting debate. I again pay tribute to the hon. Member for Sheffield, Hallam for raising this very important subject. I hope I have managed to set out the comprehensive steps the Government are taking to support the green finance system. We look forward to further action in due course.