Introduction
The Government’s decision to legislate for net zero
1.On 12 June 2019, the Rt Hon. Theresa May MP (then Prime Minister) announced that the UK would eradicate its net contribution to greenhouse gas emissions by 2050.1 A statutory instrument2 was laid before Parliament on the same day, seeking to amend the Climate Change Act 2008 to enshrine this target in legislation. The Government said that the UK was therefore the first G7 country to legislate for net zero emissions.3
2.On 2 July 2019, the Government published its Green Finance Strategy, which had two objectives:
- To align private sector financial flows with clean, environmentally sustainable and resilient growth, supported by Government action.
- To strengthen the competitiveness of the UK financial sector.4
3.This Report, which is concerned mainly with the development of Green Finance in the face of the Government’s legislative Net Zero target, is published with two particular catalysts for action in mind. Firstly, in November 2021, the UK will host the 26th UN Climate Change Conference (COP 26), which will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.5 Secondly, the Treasury has indicated that in 2022 there will be a “refresh” of the Green Finance Strategy.6
Our inquiry
4.The previous Treasury Committee launched an inquiry into the Decarbonisation of the UK economy and green finance in June 2019,7 and it published terms of reference8 seeking evidence on:
- the potential economic opportunity offered by decarbonisation,
- the Treasury’s strategy in facilitating clean growth and its response to the Climate Change Committee’s net-zero recommendation, and
- green finance.
The previous Committee received written evidence from interested parties for this first phase of the inquiry and held three oral evidence sessions.
5.After the 2019 General Election and the establishment of the present Committee, we re-launched the inquiry9 in July 2020 with revised terms of reference, in the light of the coronavirus pandemic and our work on the economic impact of coronavirus. We received further written evidence from a variety of interested parties, including members of the general public, trade associations, the finance industry and businesses. The further four oral evidence sessions of the second phase of this inquiry focused on a post-coronavirus green recovery, green infrastructure and the way in which private finance could help the Government meet its net zero emissions target.
6.We are grateful to all those who submitted written evidence and those who gave oral evidence, including business and financial services experts, economists, representatives from the Bank of England, Financial Conduct Authority, the Pensions Regulator, the Economic Secretary to the Treasury and the Exchequer Secretary to the Treasury. Transcripts of oral evidence and published written evidence can be found on our webpages.
7.We note also the valuable work of the Environmental Audit Committee in this field, most recently through its Third Report of this Session, Growing back better: putting nature and net zero at the heart of the economic recovery.10
1 UK Parliament, ‘Government gives details on setting a UK net zero emissions target’, accessed 11 February 2021
3 UK Parliament, ‘Government gives details on setting a UK net zero emissions target’, accessed 11 February 2021
4 HM Treasury and Department for Business, Energy & Industrial Strategy, Green finance strategy; Transforming Finance for a Greener Future, July 2019, p 7
5 UK COP 26, ‘UN Climate Change Conference UK 2021’, accessed 19 February 2021
6 HM Treasury, A Roadmap towards mandatory climate-related disclosures, November 2020, Para 1.21
7 Treasury Select Committee, ‘Committee launch inquiry into decarbonisation of the UK economy’, accessed 11 February 2021
8 Treasury Select Committee, ‘Decarbonisation of the UK economy and Green Finance terms of reference’, accessed 11 February 2021
9 Treasury Select Committee, ‘Decarbonisation of the UK economy and green finance inquiry relaunched’, accessed 11 February 2021
Published: 22 April 2021