Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to the UK Government Green Financing Framework, published in June 2021, whether it remains her Department's policy that funding should not be provided for the development of green technologies in the defence industry.

The principles of the Green Financing Programme are set out in the Green Financing Framework, published in June 2021. The Framework explains how proceeds from green gilts and NS&I’s retail Green Savings Bonds will finance green expenditures to help tackle climate change, biodiversity loss, and other environmental challenges, while creating green jobs across the UK. It also includes guidelines on the types of expenditures that can be included in the Programme.

The previous Government decided to exclude financing weapons in its Green Financing Framework, alongside other named exclusions. The international convention is to exclude weapons for green bond frameworks. In line with other sovereign green bond issuers and international best practices, the UK Government Green Financing Framework was designed to align with the International Capital Markets Association (ICMA) Green Bond Principles. This approach enables the UK’s green gilts to be accessible to the greatest possible pool of investors, improving value-for-money.

Green gilts and Green Savings Bonds finance public expenditures that can demonstrate a direct and positive environmental impact. Eligible expenditures are drawn from departments’ confirmed settlements in the Spending Review and assessed on the basis of their contribution to the Government’s climate and environmental objectives.

The Green Financing Framework does not underpin how Government expenditure decisions are made. As the PM has announced to Parliament on Tuesday 25 February, we will reach 2.5% of GDP expenditure on defence in 27-28.