Decarbonisation and Green Finance

Treasury Committee Closed Inquiry
Opened: 3 Mar 2020 Closed: 20 Jan 2022 Parliament page
The Treasury Committee has re-launched an inquiry into the decarbonisation of the UK economy and green finance. This inquiry will scrutinise the role of HM Treasury, regulators and financial services firms in supporting the Government’s climate change commitments. It will also examine the economic potential of decarbonisation for the UK … Read more
12 Recommendations
12 Conclusions
1 Report
10 Letters
5 Events
Activity timeline 17 events
16 Jul
2021
Report published
22 Apr
2021
Report published
7 Jan
2021
Correspondence
15 Dec
2020
Correspondence
10 Dec
2020
Correspondence
26 Nov
2020
Correspondence
16 Nov
2020
Formal meeting (oral evidence session) · Virtual meeting
4 Nov
2020
Correspondence
14 Oct
2020
Formal meeting (oral evidence session) · Virtual meeting
1 Oct
2020
Correspondence
30 Sep
2020
Formal meeting (oral evidence session) · Virtual meeting
9 Sep
2020
Formal meeting (oral evidence session) · Virtual meeting
Title HC No. Published Items Response
Thirteenth Report - Net zero and the Future of Green Finance HC 147 22 Apr 2021 24 Responded
Recommendations & Conclusions
24 results
1 Recommendation
Thirteenth Report - Net zero and t…
Although the Government has emphasised the need for a “green” recovery, we note it has...
Although the Government has emphasised the need for a “green” recovery, we note it has not, except in limited circumstances, imposed green conditionality on the support it has provided during the coronavirus pandemic. Whilst it is clear that support schemes … Read more
HM Treasury
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2 Conclusion
Thirteenth Report - Net zero and t…
The Government has made bold claims that the economic recovery will be a green recovery.
The Government has made bold claims that the economic recovery will be a green recovery. In order to achieve that, the Government needs to set out in its Net Zero Strategy who, at ministerial level, will be responsible for delivering … Read more
Government Response
The Net Zero Strategy will set out the Government’s vision for transitioning to a net zero economy by 2050. The Strategy will present the UK’s pathway to meeting carbon budgets, … Read more
HM Treasury
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3 Recommendation
Thirteenth Report - Net zero and t…
In the Net Zero Review final report, the Government should set out what mechanisms it...
In the Net Zero Review final report, the Government should set out what mechanisms it will put in place to integrate the net zero target within departments’ spending review commitments, and how departments will be held to account should they … Read more
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4 Recommendation
Thirteenth Report - Net zero and t…
The Chancellor should publish the Net Zero Strategy as soon as possible and should set...
The Chancellor should publish the Net Zero Strategy as soon as possible and should set out, in conjunction with the Net Zero Review final report, the principles upon which the UK will fund its transition to net zero carbon emissions by 2050.
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5 Recommendation
Thirteenth Report - Net zero and t…
There are a number of different estimates of the cost of achieving net zero by...
There are a number of different estimates of the cost of achieving net zero by 2050. However, the Government has not yet committed to its own cost estimates and should set these out as soon as possible. The Government should … Read more
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6 Recommendation
Thirteenth Report - Net zero and t…
The Treasury’s Net Zero Review final report should include clear sectoral pathways towards decarbonisation and...
The Treasury’s Net Zero Review final report should include clear sectoral pathways towards decarbonisation and should address the key policy decisions as to the future of high carbon industries. Particular attention should be given to the potential regional impact of … Read more
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7 Conclusion
Thirteenth Report - Net zero and t…
The Government has recognised that private finance will need to play a key part in...
The Government has recognised that private finance will need to play a key part in funding the transition to net zero. If it is to do so, the Government will need to provide long-term certainty in climate-related policy and must … Read more
Government Response
In 2019 the UK was the first major economy to set a 2050 net-zero target. Since then, the Government has set ambitious interim targets, including most recently a 78% reduction … Read more
HM Treasury
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8 Recommendation
Thirteenth Report - Net zero and t…
We welcome the announcement in the 2021 Budget of a timetable for the issuance of...
We welcome the announcement in the 2021 Budget of a timetable for the issuance of the UK’s first green sovereign bond or ‘green gilt’. However, the UK is lagging behind other countries in the issuance of these green bonds. This … Read more
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9 Conclusion
Thirteenth Report - Net zero and t…
We note the new remit provided to the Monetary Policy Committee, which will allow it...
We note the new remit provided to the Monetary Policy Committee, which will allow it to rebalance its Corporate Bond Purchase Scheme to take account of the climate impact of the bonds it holds. We will continue to scrutinise this … Read more
Government Response
The Monetary Policy Committee (MPC)’s primary objective of maintaining price stability is unchanged. Subject to achieving its primary objective, the MPC’s secondary objective is to support the economic policy of … Read more
HM Treasury
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10 Recommendation
Thirteenth Report - Net zero and t…
We note the debate at the Productive Finance Working Group Steering Committee on retail access...
We note the debate at the Productive Finance Working Group Steering Committee on retail access to the ‘long term asset fund’ (LTAF). There should be clarity about who will have access to the LTAF. The Chancellor and the financial regulators … Read more
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11 Conclusion
Thirteenth Report - Net zero and t…
The Treasury should, as part of its review of Solvency II, consider reforms that could...
The Treasury should, as part of its review of Solvency II, consider reforms that could improve the funding of sustainable green infrastructure while maintaining the financial stability of insurers.
Government Response
The Government agrees with this recommendation. The Government wants to see a prudential regulatory regime for the insurance sector that is more proportionate and flexible so that it works more … Read more
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12 Recommendation
Thirteenth Report - Net zero and t…
In the proposed framework for the new UK Infrastructure Bank, the Chancellor should clarify its...
In the proposed framework for the new UK Infrastructure Bank, the Chancellor should clarify its governance arrangements, how investment decisions will be made, and how it will ensure that it attracts sufficient private capital. In particular, it should clearly set … Read more
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13 Recommendation
Thirteenth Report - Net zero and t…
There is a high level of inertia amongst consumers around defined contribution pension fund choice,...
There is a high level of inertia amongst consumers around defined contribution pension fund choice, with most remaining in the ‘default’ fund. The Treasury has been robust in its view that default funds should not be required to move to … Read more
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14 Recommendation
Thirteenth Report - Net zero and t…
Consumers who hold defined benefits pensions have no choice as to how their assets are...
Consumers who hold defined benefits pensions have no choice as to how their assets are allocated. They rely upon their trustees. We note that previous attempts to get defined benefit schemes to acknowledge Environmental Social and Governance concerns have not … Read more
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15 Conclusion
Thirteenth Report - Net zero and t…
The financial services industry broadly accepts that ‘greenwashing’ is detrimental to good consumer outcomes and...
The financial services industry broadly accepts that ‘greenwashing’ is detrimental to good consumer outcomes and to the achievement of the net zero goal. The Treasury must work with the FCA to ensure that the regulator has the appropriate remit, powers … Read more
Government Response
Clear standards for green investments are essential to maintain trust in the market and mobilise the finance necessary to achieve the net zero goal. In November 2020, the Chancellor announced … Read more
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16 Conclusion
Thirteenth Report - Net zero and t…
Financial products should be clearly labelled to allow consumers to assess the relative climate impacts...
Financial products should be clearly labelled to allow consumers to assess the relative climate impacts of products and to make choices accordingly. However, allowing every firm to create its own consumer sustainability labels may lead to inconsistencies and consumer confusion. … Read more
Government Response
As detailed in the green finance policy package16 which the Chancellor announced during his Mansion House Speech on 1 July 2021, the Government will work with the FCA to introduce … Read more
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17 Conclusion
Thirteenth Report - Net zero and t…
We note the concerns expressed about indices, in that the most popular may be carbon-intensive,...
We note the concerns expressed about indices, in that the most popular may be carbon-intensive, and those that purport to be green may have carbon-intensive constituents. The risk remains that many consumers are unaware of the carbon- intensity of the … Read more
Government Response
The Benchmarks Regulation places regulatory requirements on the provision and use of financial indices that are used as benchmarks. In 2019, the Benchmarks Regulation was amended to enhance the transparency … Read more
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18 Recommendation
Thirteenth Report - Net zero and t…
On the concerns around the constituents of indices described as ‘green’, we note the requirements...
On the concerns around the constituents of indices described as ‘green’, we note the requirements under the Benchmarks Regulation, which should be used to help consumers make better choices. However, it is clear that in some cases the labels or … Read more
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19 Conclusion
Thirteenth Report - Net zero and t…
The Government’s Green Finance Strategy noted the need for innovation in green finance products and...
The Government’s Green Finance Strategy noted the need for innovation in green finance products and services, yet the evidence we have received suggests that the pace of innovation could be accelerated and that more could be done to encourage take-up. … Read more
Government Response
Please refer to the FCA’s response for further information.
HM Treasury
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20 Conclusion
Thirteenth Report - Net zero and t…
The Prudential Regulation Authority and Financial Conduct Authority should move quickly to incorporate their revised...
The Prudential Regulation Authority and Financial Conduct Authority should move quickly to incorporate their revised remits to include climate change. We will continue to monitor their progress and ongoing approach to the risks arising from climate change. Read more
Government Response
Please refer to the FCA’s and Bank of England’s responses for further information.
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21 Recommendation
Thirteenth Report - Net zero and t…
We have heard differing evidence on whether there should be amendments to the capital regimes...
We have heard differing evidence on whether there should be amendments to the capital regimes to promote net zero. In light of its new remit letter, the Bank of England must now explain its thinking, as to what measures it … Read more
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22 Conclusion
Thirteenth Report - Net zero and t…
The Government has moved from a voluntary to a mandatory approach for ensuring that firms...
The Government has moved from a voluntary to a mandatory approach for ensuring that firms make climate-related financial disclosures. But the process will be run to different timetables for different firms, across different regulators according to the Roadmap published by … Read more
Government Response
The UK’s joint regulator and Government TCFD Taskforce: Interim Report and Roadmap is a world-leading commitment to climate disclosures. Since publishing our Report, we have made significant progress towards achieving … Read more
HM Treasury
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23 Conclusion
Thirteenth Report - Net zero and t…
We also draw the Treasury’s attention to evidence suggesting that the disclosure regime could be...
We also draw the Treasury’s attention to evidence suggesting that the disclosure regime could be widened in scope, and that firms might usefully offer fuller disclosures.
Government Response
The UK’s joint regulator and Government TCFD Taskforce: Interim Report and Roadmap is a world-leading commitment to climate disclosures. Since publishing our Report, we have made significant progress towards achieving … Read more
HM Treasury
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24 Conclusion
Thirteenth Report - Net zero and t…
A taxonomy is an important part of identifying what can be considered green investment, so...
A taxonomy is an important part of identifying what can be considered green investment, so the announcement of a UK taxonomy is welcome. The Treasury and regulators should work at speed to ensure that there is a clear timetable and … Read more
Government Response
In November 2020, the Chancellor announced that the UK would implement a Green Taxonomy to create a common understanding of which economic activities are environmentally sustainable, improving understanding of the … Read more
HM Treasury
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Correspondence 10 letters
7 Jan 2021 To committee Letter from Economic Secretary relating to Decarbonisation and Green Finance, dated 16 December 2020
Parliament page
15 Dec 2020 To committee Letter from the Exchequer Secretary relating to the Committee session on 16 November, dated 23 November 2020
Parliament page
10 Dec 2020 To committee Letter from Director General Association of British Insurers relating to Decarbonisation inquiry, dated 23 November 2020
Parliament page
26 Nov 2020 To committee Letter from the Co-Chair of the Association of Member Nominated Trustees relating to Inquiry into decarbonisation and green finance, dated 28 October 2020
Parliament page
4 Nov 2020 To committee Letter from Sarah Breeden, Executive Director, Prudential Regulation Authority, following the evidence session on 30 September 2020, dated 19 October 2020
Parliament page
1 Oct 2020 To committee Letter from Chris Cummings, Chief Executive, the Investment Association, relating to the Committee's evidence session on 3 September, dated 24 September
Parliament page
11 Mar 2020 Governor to Chair letter regarding Climate Risk
Parliament page
11 Mar 2020 To committee Letter from Chair to Governor regarding Climate Risk 20200203
Parliament page
11 Mar 2020 To committee Letter from Chair to FCA CEO Andrew Bailey regarding Climate Risk 20200203
Parliament page
10 Mar 2020 From committee AJB CEO of FCA letter to Chair regarding Climate Risk
Parliament page