Green financing has a critical role to play in working towards net-zero and in the fight against climate change. But what exactly is it, and why is it so important?
The Climate Change Committee estimates that the UK will need to invest £1.4 trillion between 2020 and 2050 to reach net zero (where greenhouse gas emissions, particularly carbon dioxide, are minimised). This represents a significant opportunity for growth of the green economy, creating new green jobs while reducing carbon emissions.
Green financing has a critical role to play in working towards net-zero and in the fight against climate change. And as we begin to recover from the pandemic, green finance presents a huge opportunity to build back with a greener future, creating new businesses and jobs.
Green financing explained in 60 seconds
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Why is climate finance being covered at COP26?
Mobilising finance is one of four key goals at COP26 because the whole global economy will need to transition to minimise carbon emissions in order to limit global temperature rise.
At present, globally, we are not on track to meet these goals. One of the greatest challenges we face is a lack of financing to fund the solutions for a low carbon future.
Global collaboration is required as the countries who are poorest or most vulnerable to climate change, such as small island nations, need a helping hand. With COP26 attracting representatives from countries across the world, it is the perfect place for all to come together to combat climate change.
What's the difference between climate finance and green finance?
Climate finance, as will be discussed in COP26, is a subset of green finance. It refers primarily to public finance, or where developed countries provide financing through a variety of sources, that promotes multilateral efforts to combat climate change. Green finance is a wider term that encompasses all financial flows that support sustainable environmental objectives.
Why is green financing important?
In a nutshell, green finance can provide economic and environmental benefits to all, and needs to be managed to ensure there is a just transition to a low carbon society.
Socially, green financing expands the number of individuals and businesses who can gain access to environmentally-friendly goods and services, especially for the vulnerable and marginalised. This makes the transition to a low carbon society more equal, creating more socially inclusive growth.
It means more money is invested into businesses to help them become greener. This can help businesses to grow, creating jobs, reducing carbon emissions and stimulating the economy, creating a ‘great green multiplier’ effect where both the economy and environment continuously benefit. A win-win for everyone.
At Lloyds Banking Group we want to play our part in supporting the transition to a low carbon economy, furthering our purpose of Helping Britain Prosper, and have committed to increasing our funding for green finance for commercial banking to £5 billion. We have also launched several green finance propositions for our commercial clients, as well as our mortgage and motor finance customers.
Sarah joined Lloyds Banking Group as a Senior Manager within General Insurance in 2012, and has led the product management and development of a number of general insurance product lines.
In 2016 she became the Business Support Manager for the General Insurance & Protection Director and then led the Motor Insurance business from the end of 2018, adding to that the Commercial Insurance business a couple of years later, before moving in to her current role as Senior Manager within the Sustainable Business team. In this role she has been leading on work to embed the Group-wide sustainability priorities, and developing initiatives that contribute to the Group’s transition to net-zero.
Sarah gained her MBA from the University of Strathclyde Graduate School of Business in 2004, having started her studies whilst working for Standard Life Assurance Company as a Graduate Management Trainee.
Seizing the green growth opportunity
The transition to a green economy will support the UK’s recovery and promote long-term prosperity, while helping to make our planet more resilient.