UK Finance responds to Labour sustainability review plans

Shadow chancellor John McDonnell warned that some companies are still funding major polluters


Joe McGrath

UK Finance, the trade group for the British banking and finance industry, has said it is “ready to respond” to ambitious targets set to ensure the UK is net zero carbon by 2050.

The trade group’s chief executive, Stephen Jones, published a statement in reaction to a speech by shadow chancellor John McDonnell on Monday (24 June), which claimed that “parts of the finance sector are inflating the value of brown assets”.

McDonnell said it was essential that “the finance sector is pulling together” highlighting the fact that some companies are still funding firms which “pump greenhouse gases into our atmosphere”.

The shadow chancellor outlined plans for a strategic review of how the finance industry is responding to climate change. He specifically named asset managers, pension funds, hedge funds and private equity managers as businesses that will be scrutinised.

“The policy framework for regulation and supervision for the non-bank financial institutions may require wider reforms to the regulatory architecture,” McDonnell said.

“The review group comprises experts with an interest or background in environmental and climate questions from academia, policy-making and finance sectors.”

Individuals earmarked to lead the review group include Daniela Gabor, an expert on shadow banking, Lord Kerslake, the former head of the civil service, Ann Pettifor of the Progressive Economy Forum, Peter Rice of Clearpoint and Graham Turner of GFC Economics.

“The shadow chancellor has today posed the question of whether the financial sector is up for rising to the challenge of climate change,” said Stephen Jones, chief executive of UK Finance.

“Achieving net zero carbon by 2050 is a difficult but critical target that we must all work together to address and as an industry we stand ready to respond.”

Mr Jones said noted comments from the Bank of England governor last week, crediting the first steps taken by business, including financial services, to put in place the framework offered by the Taskforce on Climate-related Financial Disclosure.

“Describing what is needed as a ‘green industrial revolution’ is by no means an overstatement. banking and financial services will not be found lacking,” he added.

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