The UK government is hoping to transform the UK into the world’s sustainable finance capital through new transition planning and investment frameworks
The UK government has created a strategy to establish the country as the global centre for sustainable finance, revealing a package of proposals that support climate transition planning and boost private investment in clean energy. Energy Secretary Ed Miliband presented the plans during the Climate and Innovation Forum at London Climate Action Week on 25 June.
The initiative forms part of the government’s broader “Plan for Change,” which aims to unlock billions in clean energy investment and accelerate the country’s journey to net zero. A significant part of the strategy involves the development of high-quality climate transition plans by banks and large businesses, a move aimed at attracting green investment and providing long-term certainty for the financial markets.
The transition plans
Transition planning involves companies creating a clear roadmap to align their operations, strategies, and business models with climate goals. The government aims to standardise this process, providing investors with reliable information to guide their financial decisions and direct capital toward sustainable business models.
Around 70% of FTSE 100 companies have already incorporated core elements of transition plans voluntarily. The new proposals aim to extend this practice across the broader economy, establishing consistent expectations for disclosure and enabling the UK financial sector to become a hub for green finance innovation.
Driving investment through policy certainty
With net zero economies growing three times faster than the broader economy, according to CBI Economics, the UK government is seeking to capitalise on this momentum. Since July last year, over £40 billion in private clean energy investment has been committed, underlining the market’s appetite for environmentally responsible growth.
To maintain and grow this investment, the government will act on recommendations from the Transition Finance Market Review. This includes launching consultations on three key areas:
- How to implement transition planning requirements across industries
- The introduction of UK Sustainability Reporting Standards
- A new voluntary registration regime for sustainability assurance providers
These steps are expected to enhance transparency and investor confidence while stimulating competition in the growing sustainability assurance market.
Aligning growth with green goals
The proposals aim to strike a balance between rigorous sustainability standards and the government’s commitment to reduce regulatory compliance costs by 25%. By aligning new reporting requirements with international frameworks, such as the International Sustainability Standards Board (ISSB), the UK aims to streamline reporting for global investors while maintaining high-quality data and ensuring comparability.
Improved transition and sustainability reporting is expected to provide the information needed for financial institutions to make informed low-carbon investment decisions. This not only supports the UK’s net zero ambitions but also helps businesses future-proof themselves against the physical and economic risks of climate change.
Creating a resilient, competitive economy
These measures demonstrate an economic strategy that positions the green transition as a driver of industrial growth and job creation. With a focus on innovation, skills, and long-term resilience, the government aims to maintain the UK’s industry’s global competitiveness while attracting high levels of green investment.
By creating a clear and trusted framework for transition finance, the UK aims to capitalise on a time-sensitive opportunity to become a leader in sustainable finance, delivering both environmental progress and economic prosperity.
