Select committee: Environmental Audit Committee
Conclusion 3
First Report - The financial sector and the UK's net zero transition
Published 29 Nov 2023
Paragraph 53
Environmental Audit Committee The financial sector and the UK’s net zero transition All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
We have heard during our inquiry that despite the pledges set out and agreed upon by global governments in the Paris Agreement, private banks have financed trillions of US dollars into fossil fuels. New UK fossil fuel Initial Public Offerings are still being approved, and the UK Government is pressing ahead with new fossil fuel investment opportunities. We have been told that, while the current ratio of investment capital in low carbon energy compared to fossil fuels is 0.9:1, this needs to quadruple to 4:1 by the end of the next decade. While there are examples of financial institutions moving away quickly from fossil fuel investments, the engagement policies enacted by many organisations could be clearer about the extent to which they are still financing companies not aligned with the Paris Agreement.
From: Environmental Audit Committee, First Report - The financial sector and the UK's net zero transition (HC 277), paragraph 53, 29 November 2023
Government response
The government responded to the whole report on 23 February 2024 (deadline 29 January 2024).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government sets out its position on the financial sector and net zero, defending continued North Sea licensing, setting out plans for consultations on transition plans and voluntary carbon markets, and confirming a UK carbon border adjustment mechanism by 2027.
- On a date to end new North Sea licensing, it states it has "already considered fixing an end date" and "decided not to pursue this approach", citing a 2021 review and a climate compatibility checkpoint.
- On transition plans, it says its "upcoming consultation will consider the UK's approach to transition plans", including the role of the Transition Plan Taskforce's Disclosure Framework.
- On the green taxonomy, it will introduce a voluntary testing period "for at least two reporting years before considering the introduction of mandatory obligations".
- On voluntary carbon markets, it will consult on next steps and "intend[s] to publish the consultation in early 2024".