Webinar: Financing climate action with positive social impact

How banking can support a just transition in the UK

We were proud to host the Parliamentary launch of the Grantham Institute’s report on financing a just transition, co-authored by Professor Nick Robins and Sophia Tickell. We were joined by Bim Afolami, Conservative MP for Hitchen and Harpenden and Matthew Pennycook, Labour MP for Greenwich and Woolwich. The discussion was chaired by Polly Billington, Director of UK100 and the APPG’s Secretariat. The event was hosted in partnership with the Financial Markets & Services APPG and UK Finance, and made possible by APPG supporters, HSBC.

There was a high level of engagement from our audience, including contributions from APPG Vice-Chair Gareth Davies MP, Caroline Lucas MP and Michael Liebriech. We were unfortunately unable to answer all questions raised by our guests, but hope to address them in a forthcoming blog post. As well as making several recommendations for the banking and financial sectors, the report published on Tuesday outlines policy actions that could be taken at a local, regional and national level. Our panellists explored the full recommendations of the report, available to read here.

In summary, the report urges policymakers to create an enabling framework by:

1. Making a strategic commitment to a just transition. This could be characterised by a just transition policy statement and the creation of a UK-level multi-stakeholder ‘Just Transition Task Force’ to advise on implementation, the establishment of just transition sectoral plans, and the identification of just transition standards to be applied by government, business and finance.

2. Kick-starting the just transition through the UK’s COVID recovery plans. This could involve aligning recovery plans with the Paris Agreement, and targeting a sizeable proportion of stimulus spending on sustainable growth opportunities with strong economic multipliers in terms of job creation and productivity enhancements via investments in skills, innovation and infrastructure.

3. Aligning public finance with the just transition. This could include extending the mandates of institutions like the British Business Bank to support the SMEs through the just transition, the establishment of a UK National Investment Bank with an explicit sustainability mandate focusing on infrastructure (including buildings) and issuing sovereign green bonds to finance a just and sustainable recovery.

4. Integrating the just transition into financial regulation of climate risk, including exploring how the social dimension of the transition can be incorporated into the reporting framework of the TCFD, and using the results of the forthcoming climate stress test to identify transition hot spots across the country.

5. Committing to supporting place-based action to deliver a just transition. This could include applying the just transition policy to the Shared Prosperity Fund, adapting the Social Value framework as a tool for local procurement, extending Climate Emergency declarations to include the just transition and expanding the UK impact investment and community finance market to deliver the just transition at the local level.

6. Making the just transition a key part of international climate action. This could involve promoting the just transition as a key approach to achieving ambitious climate outcomes during the UK’s presidency of the G7 and at the COP26 summit in 2021, mobilising the international financial community in partnership with UK banks and investors to help deliver the just transition, and setting the standard through leadership on the just transition from the UK’s international financial institutions such as CDC and UK Export Finance.