Rishi Sunak sets out Britain's bid to remain a financial leader with first green bond issue

Government also setting out how EU financial services firms can operate in Britain post-Brexit

UK finance minister Rishi Sunak told the House of Commons on Monday that the government's approach to financial services will be guided by what is right for the country. EPA

Britain's finance minister Rishi Sunak set out plans to bolster the UK's position as a global financial leader on Monday with the issue of the country's first green bond next year, as the country looks to extend its dominance in green finance and financial technology.

In his first speech on financial services, Mr Sunak said the sector will be essential to the UK's economic recovery as the UK embarks on a new life outside the EU in the Covid-19 era.

Mr Sunak said the government was unilaterally setting out how it would let EU financial services firms operate in Britain after the post-Brexit transition period ends on December 31, as it was now clear there were "many areas" where the EU was not prepared to even assess access to British firms.

“We are starting a new chapter in the history of financial services and renewing the UK’s position as the world’s pre-eminent financial centre," Mr Sunak said.

"By taking as many equivalence decisions as we can in the absence of clarity from the EU, we’re doing what’s right for the UK and providing firms with certainty and stability. Our plans will ensure the UK moves forward as an open, attractive and well-regulated market, and continues to lead the world in pioneering new technologies and shifting finance towards a net zero future.”

To help the UK meet its 2050 net zero target, Mr Sunak said the government will issue its first Sovereign Green Bond in 2021, subject to market conditions. The bond will help finance projects that will tackle climate change, finance much-needed infrastructure investment and create green jobs across the country.

Mr Sunak also unveiled more robust environmental disclosure standards so that investors and businesses can better understand the material financial impacts of their exposure to climate change, price climate-related risks more accurately, and support the greening of the UK economy.

The UK will become the first country in the world to make Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosures fully mandatory across the economy by 2025, he said.

Mr Sunak's comments came the same day that former Bank of England governor Mark Carney called on banks, insurers and fund managers to invest in private sector initiatives and profit from "the greatest commercial opportunity of our time" to help companies transition to a net zero future.

Mr Carney, a UN special envoy for climate action, told the three-day Green Horizon Summit on Monday that achieving net zero targets on greenhouse gases required “a whole economy transition, involving every company, bank, insurer and investor", who can now profit from "changing consumer preferences and new climate policies".

Mr Carney set out a private finance strategy ahead of Cop 26, the UN climate summit to be hosted by the UK which was due to start Monday in Glasgow. However, the event has been pushed back to November 2021 by the coronavirus pandemic.

Meanwhile, Britain’s market watchdog is introducing rules requiring the majority of the UK’s listed companies to make better disclosures about how climate change affects their business.

The regulator intends to introduce a new rule for reporting periods beginning from January 1 next year, Financial Conduct Authority chief executive Nikhil Rathi said on Monday at the Green Horizon Summit.

Mr Sunak also outlined proposals to strengthen the UK's position as a global green finance hub and said the country will accelerate the drive for net zero ahead of the Cop 26 UN summit in November next year.

BoE governor Andrew Bailey told the summit that the UK has not abandoned its commitment to climate change despite prioritising people's jobs, livelihoods and businesses over climate change at the start of the Covid-19 crisis.

“I believe that was the right response in the face of such an emergency and in all conscience it was not right to say to people that they would be denied a livelihood because their employment was of the wrong sort for the climate," Mr Bailey said.

The BoE injected a further £150 billion ($195bn) of stimulus into the UK economy last week as it warned a second wave of the coronavirus pandemic will lead to a slower, bumpier recovery.