Mike Zehetmayr, Financial Services Partner, EY comments:
“Point 10 of the 10-point plan is to make the City of London the global centre for green finance through the sovereign bond, carbon offsets markets and disclosure requirements. This comes hot on the heels of the Chancellor’s announcements on TCFD reporting and the Green Taxonomy earlier in the month, and together they set us on a much more convincing path to Net Zero. They should also lay strong foundations from which UK Financial Services can build a world-leading sustainable finance industry. We shouldn’t be under any illusion though that there’s a lot to do and get right.
“In the first instance, we need to be aware that the transition to a lower-carbon economy will be carbon intensive in itself, so care needs to be taken that the incentives and responses attached to carbon emissions, don’t lead to banks taking a short term view where they’re not incentivised to support the transition.
“Mandatory disclosure and the green taxonomy should help Financial Services firms make better informed decisions on investments and loans, mitigate risks and create long-term value. However, the development of green taxonomies beyond bonds, means we need to understand the environmental and social impact of each product.
“Mobilisation of a functioning market for carbon will need trusted data, underlying risk management, reporting, and ultimately it will need to generate returns – it will need to deliver on all of Mark Carney’s three R’s.
“Our analysis in Europe shows that low-carbon projects have a higher job-intensity ratio than in most other traditional and fossil-based industries and so a Green Industrial Strategy should also support an economic recovery. To give an idea of how many jobs could be created, we can apply some of the analysis that EY has done with the European Climate Foundation on the Green Covid-19 Recovery and Resilience Plan for Europe. The analysis indicates that on average, €1 million invested could support 12 FTEs, or 15 jobs, so the amount of Government funding announced today is really positive, but it will need to kick start private investment if the UK is to deliver upon the ambition inherent in the 10-point plan.”
Notes to editors:
Full section from the report Alexis Gazzo and the team led is below and link to the report is here.
The list of 1,000+ projects that have been selected represents an aggregate investment of €200 billion, distributed evenly in all EU27 countries. We estimate that taken together, these investment opportunities will support some 2.8 million jobs (headcount) or 2.3 million FTEs (Full Time Equivalents). This represents nearly a quarter of job losses due to the economic consequences of the Covid-19 crisis in Europe. With a higher job-intensity ratio than in most other traditional and fossil-based industries, the low carbon projects we have uncovered can have a major contribution to a green and just economic recovery in Europe. Our analysis indicates that on average, €1 million invested in the list of opportunities we have uncovered will support 12 FTEs, or 15 jobs.