Scope of the inquiry
The Treasury Committee has launched an inquiry into the
decarbonisation of the UK economy and green finance. The
Committee 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 economy in terms of job creation
and growth.
Terms of Reference
This inquiry will cover:
-
The economic opportunity that decarbonisation presents
for the UK, and the potential of the green finance
sector
-
HMT’s strategy in facilitating clean growth and its
response to the CCC’s net-zero recommendations
-
The role of the Spending Review in facilitating
net-zero
-
The role that financial services firms are currently
playing in financing the transition
-
The 'green' financial product landscape and their
associated regulatory environment.
Some of the key questions the Committee will consider in
this inquiry include:
The economic opportunity
What economic costs and benefits does decarbonisation
present for the UK?
What benefits can a growth of the Green Finance
sector deliver for the UK, and does the UK hold a competitive
advantage in this space?
How might HMT deliver a regionally balanced and
‘just’ transition across the UK?
HMT's strategy
What is HMT’s current strategy, and approach
to, UK decarbonisation, and is it fit for
purpose?
How does HMT work with the Clean Growth Strategy and
government departments to support decarbonisation? Is this
working well?
How should HMT’s approach evolve to ensure the Government
meets the legally binding carbon budgets (and the net-zero
targets, if applicable[2])?
What role should the 2019 Comprehensive Spending Review
play in UK decarbonisation? What projects or measures should
receive additional funds through this process?
Green finance
What role do UK financial services firms currently play in
the decarbonisation of the economy, (for example, through
stewardship, capital allocation to green projects, green
financial products)? What more can they do?
What steps have UK banks, asset managers, and pension funds
taken to ‘green’ their business models, investments strategies
and balance sheets, taking in to account climate and transition
risks?
Are there any barriers (regulatory or otherwise) preventing
financial services firms from delivering green finance or
investing in ‘green’ assets?
What prudential risks does climate change
pose?
What is the Financial Conduct Authority and the Prudential
Regulation Authority doing to support decarbonisation and a
‘greening’ of the financial system?
What expectations do (and should) they place on
regulated firms about their role in the transition through their
policy and supervisory activities?
What is the consumer demand for ‘green’ financial
products?
Are there a range of accessible options available to
consumers seeking to source ‘green’ financial products across the
product suite (for example, mortgages, bonds, investment
products, savings accounts, loans)? Do certain instruments
dominate the green finance landscape, and if so,
why?
Do accompanying documents for ‘green’ instruments (bonds,
funds, etc) articulate why and how the composite holdings within
that instrument are ‘green’? Are obligations placed upon listed
companies, to report their carbon emissions, to inform fund
composition?
Does the current advice and KYC process effectively
facilitate a consideration of sustainability
preferences?
Evidence given by Chris
Stark, Chief Executive, Committee on Climate Change, Nick Robins,
Sustainable Finance Professor, London School of Economics,
Sagarika Chatterjee, Director of Climate Change, Principles for
Responsible Investment
