COP26: London losing to Europe on green finance says New Financial


ONDON is losing out to Europe in the race to dominate the “green” finance industry, says an influential think tank in a report it says is a “reality check”.

Ahead of COP26, the environmental summit that kicks off next week, New Financial says the City is falling behind rivals despite all the talk of “ESG” among large corporations.

Teenage campaigner Greta Thunberg is right to criticise authorities for moving slowly on climate change, the report authors admit.

Global banks looks set to make billions from the green finance overhaul, providing loans and support to a new breed of environmentally friendly businesses – and diverting money away from old energy giants.

But London, perhaps a natural home for green money, given the UK’s huge wind and sea energy assets, is at the moment “playing catch-up”.

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William Wright, the founder of New Financial, said: “The EU has a clear lead in ESG activity. In more than 90% of the 60+ metrics that we analysed, the EU is well ahead of the UK, US, and Asia. In most markets, Europe punches significantly above its weight with ESG activity in global capital markets.”

ESG (environmental, social, governance) investment assets represent 6% of all funds in the UK, less than half the 13% in the EU.

The UK is about “four or five years” behind the EU on green finance, says New Financial.

Wright added: “Over the past few years sustainable finance and ESG have climbed to the top of the agenda for policymakers and the financial services industry in Europe and around the world. The public commitment to ESG across the industry has been high, growth in ESG products and activity has been rapid, and the EU has led the world in creating a framework for sustainable finance.

The report is a collaboration with Luxembourg.

Nicolas Machel, chief executive of Luxembourg for Finance, said: “Greta Thunberg recently called out world leaders for years of ‘blah blah blah’, accusing them of decades of well sounding words but lacking in real and decisive action when it comes to tackling climate change.”

He adds: “As this report shows she is certainly correct in criticising the slow pace of progress. However, while there certainly has been an abundance of ‘blah blah blah’, it is not correct to say that it has been all words and no action. There is a growing level of commitment to ESG initiatives across the financial services industry, and while the concrete actions taken by financial institutions may not yet match their commitments, regions across the globe are seeing a steady uptick in sustainable finance offerings, with the EU being a clear pioneer and leader in this space.”