The Government’s green finance strategy, released this summer, sets out how the UK will rise to the challenge of creating a sustainable and resilient economy through the growth of all things ‘green’. It calls for collective action to deliver far-reaching change that is needed for a greener, more sustainable and prosperous future. This has become even more crucial amid the COVID-19 outbreak, and green finance has become a key focus for economic recovery in the pandemic’s aftermath.
Public sector organisations need to consider how they can get on board the ‘green train’ and deliver more sustainable outcomes.
The green finance strategy has three key elements:
1. Greening finance – ensuring that all current and future financial risks and opportunities from climate and environmental factors are incorporated into any financial decisions and that markets for green financial products are strong.
2. Financing green – speeding up finance to support the achievement of the UK’s carbon reduction and other environmental ambitions.
3. Capturing the opportunity – ensuring UK financial services capture the opportunities arising from this initiative, such as climate-related data and analytics, and from ‘financing green’, such as new green financial products and services.
The Government wants to encourage local engagement and speed up green investment across the UK by overcoming perceived barriers and building capability in the market. What does this mean for the public sector in relation to its green objectives moving forward?
Firstly, it is clear we need to respond. We are already beginning to see initiatives around the world that are leading the way towards cleaner, sustainable and more resilient economic growth. Closer to home, there are an increasing number of examples of public authorities engaging in ‘green growth’.
For example, the Greater Manchester Combined Authority (GMCA) has a five-year Environment Plan where boosting investment in the natural environment is one of five key priorities. As part of this, the GMCA commissioned a Natural Capital Investment Plan to identify opportunities for new sources of funding, including capturing new revenue opportunities by selling habitat and carbon credits to other organisations.
In Cambridgeshire, the council put forward a budget of £16m to reduce emissions from council assets and support other climate resilient initiatives within local communities. The council has already carried out work improving energy efficiency in schools and offices, as well as investing in a solar power plant. A further £56m has been committed up to 2023/24 to further support reductions in carbon emissions – including generating renewable energy for local businesses and encouraging electric vehicle charging infrastructure.
Swindon BC has raised £2.4m through crowdfunding to finance two new solar farms with residents able to invest anything between £5 and £20,000. The solar farms now generate enough energy for around 1,200 homes, where residents benefit from cleaner energy and reduced carbon emissions.
These examples just provide a flavour of what is possible. There are a number of issues to consider moving forward:
• How co-ordinated are we in our vision for the future? Do we understand the potential that investing in the green economy will provide us?
• Do we have a complete understanding of our own asset base and the potential that we might find there?
• Have we got cross-party political support moving forward so that all business cases will stack up whichever administration is in control?
• Do we fully understand the range of investment opportunities and funds available to take advantage of the opportunities out there?
• Do we have the in-house expertise and resources to drive this agenda forward, cutting across the competing demands of service delivery and other pressures we face?
• How do we engage with our staff to enable a culture that is fully supportive, and how do we reach out to our communities to ensure they are at the heart of our future vision?
There are further discussions to be had moving forward about the future of green finance initiatives for local authorities. The Chartered Institute of Public Finance and Accountancy’s (CIPFA) upcoming sustainability conference will offer an opportunity to explore these issues in greater depth and explore the ways in which a green approach can be at the heart of what we do.
David Bentley is head of asset management at CIPFA