The UK plans to launch the first green government bonds
November 12, 2020
Chancellor of the Exchequer, Rishi Sunak, announced plans to launch the UK’s first green government bonds, following sixteen other countries including Germany and Sweden. He confirmed that the UK will issue its first "green gilts", also known as Sovereign Green Bonds, in 2021 and will introduce new climate disclosure requirements from 2025. This move is aimed at usage of the growing investor demand for assets that fund environmentally friendly projects.
"This will be the first in a series of new issuances as we look to build out a green curve over the coming years, helping to fund projects to help tackle climate change, finance much-needed infrastructure, and investment and create green jobs across this country," Sunak said.
To guarantee that the government distributes funding raised through the bond appropriately, the Treasury has outlined a pledge to implement a green finance taxonomy, similar to that being established by the EU. The taxonomy specifies which activities can be defined as “green” and aligned with the UK’s long-term climate targets. The Treasury establish a new UK Green Technical Advisory Group to create and implement the taxonomy.
The Financial Conduct Authority (FCA) outlined stricter rules on climate risk reporting in line with the recommendations of the global Taskforce on Climate-related Financial Disclosures (TCFD).
From 2023, all publicly listed UK companies with a premium listing will be required to “comply or explain” with the TCFD’s requirements. Rules will then be tightened and extended further in 2025, subject to consultation.
A big part of the UK’s finance industry will be subject to these new requirements, including major pension schemes, life insurance providers, and asset managers, Sunak said.
Mr. Sunak said Britain would be the first of the Group of 20 countries to follow the recommendation of the Basel-based Financial Stability Board’s Task Force on Climate-related Financial Disclosures.
Company — United Kingdom
Full nameThe United Kingdom of Great Britain and Northern Ireland
Registration countryUnited Kingdom