Source · Select Committees · Environmental Audit Committee
Recommendation 25
25
Deferred
Paragraph: 130
Establish formal mechanism by end of Parliament to track net zero and nature financial flows
Recommendation
We recommend that the Government go further and turn this research into a formal tracking mechanism by a date no later than the end of the current Parliament. The Government should task either an existing independent body, or create a new 62 The financial sector and the UK’s net ero transition independent body, to track net zero and nature-related financial flows, as well as investment in high-carbon projects. Within a year of setting up this tracking mechanism, the Government should review financial flows against its investment roadmaps to determine whether those roadmaps provide sufficient coverage of the whole economy. It should also use this information to inform whether further incentives or regulation are required to shift financial flows towards the Government’s net zero and nature targets.
Government Response Summary
The government acknowledges the need for tracking investment flows and states that the scoping phase for a UK Landscape of Climate Finance (LCF) model has concluded. It is now considering next steps, including the potential role of an independent body, and will begin gathering data on private finance for nature's recovery this year, but does not commit to a formal tracking mechanism by the end of the current Parliament.
Paragraph Reference:
130
Government Response
Deferred
HM Government
Deferred
We recognise that tracking investment flows will help industry and the UK Government to monitor progress against our targets and provide timely assessment on the impact of UK Government interventions and industry response. In response to calls from the Climate Change Committee and National Audit Office, the UK Government committed to ‘work with external partners and data providers to better track private investment into the net zero economy going forward’. We are also committed to monitoring annual private finance flows into nature’s recovery in England against our target. We commissioned two pieces of external research to scope existing investment tracking methodologies and evaluate available data sources: The scoping phase of UK Landscape of Climate Finance (LCF) research to develop a pilot LCF model to track investment into net zero sectors has now concluded, and we are considering next steps, including the potential role of an independent body. Stakeholder engagement with data holders, financial sector participants and existing LCF developers has informed this scoping and methodology phase. Research has also concluded into options to track private finance into nature’s recovery in England. Further to this, we will begin gathering data this year against our target for this finance to reach at least £500m every year by 2027, and over £1bn by 2030.