Greening the Financial System

Jim Shannon Excerpts

Wednesday 30th November 2022 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Sheffield, Hallam (Olivia Blake) for securing the debate and for setting the scene so well, and it is always nice to follow the hon. Member for Rother Valley (Alexander Stafford), who cannot be ignored—indeed, he was not ignored in the Chamber today by you, Mr Bone. He is certainly a gentleman who sets the scene well on subjects that he is interested in and knowledgeable about.

As part of our climate change goals, greening our financial system has become a priority, and the hon. Members for Sheffield, Hallam and for Rother Valley are absolutely right to say how important that is. I believe that our financial systems across the UK have a duty to ensure that they are investing wisely in green strategies and understand that banks can take steps to become greener. I always speak from a Northern Ireland perspective, and I will give examples of some of the things that we are doing. Before I do so, I want to say that I am encouraged by Government strategies in relation to mapping and charting a way forward. Perhaps we will hear more about that from the Minister, who I hope will give us encouragement.

In November 2020, the then UK Prime Minister, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), set out his “The Ten Point Plan for a Green Industrial Revolution”. I always welcome such steps, but what we want to see, and I think what the hon. Member for Sheffield, Hallam wants to see, is a wee bit more meat on the bones, to see what the plan means. The former Prime Minister stated that his plan would create hundreds of thousands of jobs,

“making strides towards net zero by 2050.”

The highlights included a ban on combustion engine sales by 2030, a pledge to quadruple offshore wind power by 2030—the hon. Member for Sheffield, Hallam referred to offshore and onshore wind power—and an investment of £525 million towards new nuclear power. I am not absolutely sure whether the target for the ban on combustion engine sales by 2030 is achievable, given that we live in a country whose population is dispersed between urban and rural areas. I live in the countryside, where people need to have cars—usually diesel cars in the case of the farming community—because bus services are not always dependable.

The hon. Member for Sheffield, Hallam also referred to charging points. We have a lot to do in Northern Ireland to catch up on charging points; I mean that. I know that the Government, Northern Ireland Assembly and local councils back home have taken some steps, but again they are all commitments: we have not yet seen much of how they will work out.

In relation to nuclear power and the other things in the former Prime Minister’s strategy, the Northern Ireland Department for the Economy came up with its own strategy entitled “Future Energy Decarbonisation Scenarios”, which aimed to represent realistic green truths for the future of our economy, financial sectors and businesses. Both strategies ensure that the banking and finance sector will play a key role in the greening of the economy and the ambition to reach net zero by 2050. I, the hon. Lady and others welcome the commitment, but we want to see how it will turn out.

The UK must ensure that we consolidate our position as a global hub for green finance. We must position the UK at the forefront of green financial innovation and data and analytics, and build skills and capabilities on green finance. Banks are looking to help their customers thrive in the low-carbon transition, and build a more sustainable future for themselves, their businesses and ultimately the planet that we live on, which we will leave for our children and grandchildren.

I commend the Ulster Bank in Northern Ireland in particular. One branch is only a couple of doors down from my office in Newtownards. That bank is offering green initiatives for Northern Ireland businesses, which include the adaption of smart technology, going paperless, cutting energy costs by introducing remote working, and carrying out energy audits that allow businesses to spot where costs could be saved. That is a very practical and physical way of showing how we can move forward. I commend the Ulster Bank for its commitment and clear strategy, and for doing its bit for customers. I wish that other banks in Northern Ireland, and indeed across this great United Kingdom of Great Britain and Northern Ireland, would take similar initiatives.

The Green Finance Institute in Northern Ireland has stated that we need an extra £5 billion over the next decade to protect and restore nature. In relation to the UK as a whole, the Parliamentary Office of Science and Technology released a briefing to discuss the financial risks of nature loss. The shadow Minister, the hon. Member for Bristol East (Kerry McCarthy), and the shadow spokesperson for the Scots nats party, the hon. Member for Kilmarnock and Loudoun (Alan Brown), have a deep interest in that subject, as does the Minister. We cannot ignore nature loss.

The Amazon rainforest has always been a pet subject of the right hon. Member for Epsom and Ewell (Chris Grayling), who is no longer in his place. He often talks about it. Just last week in the national papers, I read an article that said the Amazon rainforest is at a crux. It is reaching the stage where it will no longer be the lungs of the world, such has been the destruction and the removal of trees. We need to encourage the Brazilian Government. The article made the point—and this ties in well with the debate today—that many investment companies, finance companies and banks are investing in the companies that are removing the trees from the Amazon rainforest. There is a duty upon them to look at what they are doing, and how it is affecting the Amazon.

Some people will ask how relevant the Amazon rainforest is to us here in London today. Well, it is incredibly relevant. It is the lungs of the world and the biggest rainforest—at least it is now; we are not sure whether that will continue. I will ask the Minster one question, ever mindful that he is out to respond in a positive fashion. What discussions has he been able to have with the Brazilian Government, and with the finance companies and banks that are investing in the firms that are removing trees from the rainforest? What happens there will become irreversible at some stage. We in this part of the world—in London—will be poorer for that. Let us do something positive if we can.

Some of this economic activity is driving the nature loss that I referred to. That results in physical sources of financial risk for businesses and financial institutions. For example, that 1 million species are under threat of extinction should not solely be an issue of concern for conservationists, ecologists and nature lovers. It should also concern global business, the finance industry and the agri-environment sector. We cannot ignore the fact that we unfortunately get regular notifications about the animals, birds and plants that are in danger of becoming extinct because of what is happening.

We need a strategy and a way forward for the finance industry and the agri-environment sector. Meeting our targets will require unprecedented public and private sector investment. The Government have not been slow to respond to requests about environmental technology, infrastructure, services and jobs, and we welcome that.

It is encouraging that several Northern Ireland and United Kingdom banks and financial institutions have joined green marketplaces. That indicates that we are heading in the right direction to green our financial system. I know this request does not suit everybody, and perhaps it is not the right thing to do from a ministerial point of view, but I sometimes wonder whether we should set targets, although if we do that and do not achieve them, does that mean that we are not winning? It is good to have a target or a percentage at least to ensure we are heading in the right direction in greening the financial system.

It is great to see the uptake of green loans, which ensure environmentally friendly and sustainable investments into businesses. That is another indication of the success of financial institutions and their willingness to take part in supporting this agenda.

We all recognise that there is still a long way to go, but we are committed to the strategy and the programme of change, and are doing our best to head that way. What discussions have other countries in the world had? COP27 has just finished. It was good to get a deal at the end, but it took a long time. I noticed when I watched it on TV that they were sitting there for 36 or maybe 48 hours, and were under a bit of pressure. How do such agreements relate to a strategy for the future? I look to the Minister to assess what further steps we can take as a collective on green finance to meet our 2030 and 2050 targets and goals.