UK Aims To Be Global Green Finance Hub
A UK government minister said that one of the priorities for the country after it leaves the European Union is to become a global hub for green finance.
John Glen MP, economic secretary to the Treasury, gave a keynote speech at the City Week 2019 conference in London this morning. Glen said other priorities, in addition to green finance, are fintech, India and China.
This morning I’m opening the #CityWeek2019 annual conference – London isn’t just a European financial hub, it’s a global one. And I want to make sure it stays that way in the future. pic.twitter.com/wgAs3BY1IS
— John Glen MP (@JohnGlenUK) May 20, 2019
He said: “More than 100 green bonds have been listed in London to date, from 16 countries raising $26bn (€23bn). Our aim is to establish the UK as the undisputed global hub of green finance, with links to all the major markets.”
Glen noted that in addition to green bonds, other initiatives gaining traction include green loans, green mortgages and environmental, social and governance (ESG) exchange-traded funds.
He continued that the UK government will publish its green finance strategy this year and the Green Finance Institute will launch on July 2.
Last week the Green Finance Institute announced the appointment of Dr Rhian-Mari Thomas as chief executive.
— Green Finance (@GFI_org) May 14, 2019
The Netherlands is due to issue its first green bond this week on 21 May.
Bram Bos, lead portfolio manager green bonds at NN Investment Partners, said in an email: “We anticipate positive knock-on effects from this green bond issuance, as it is likely to prompt other Dutch issuers to start issuing green bonds. This is also an interesting development for investors, as it is the first AAA green government bond. Some institutional investors are only allowed to invest in highly rated government bonds; this will enable them to ‘greenify’ their portfolios.”
— Shanny Basar (@shannybasar) May 20, 2019
He said the second opportunity is fintech sector in the UK.
“Our five fintech bridges are up and running, linking our most promising start-ups with overseas markets,” he added. “The FCA’s proposal to create a global sandbox has now found form in the Global Financial Innovation Network.”
The UK Financial Conduct Authority launched the global network which has been operating since January to allow new firms to test products and services in multiple jurisdictions. Onfido, a UK company which provides document ID verification and facial biometrics technology, is one of the fintechs selected for the pilot programme.
India and China
The third and fourth opportunities are India and China.
“India invests more in the UK than the rest of the EU combined. We want to extend our partnership with India further.” India day coming on 16th July. @JohnGlenUK @hmtreasury at #CityWeek2019 @HCI_London pic.twitter.com/lwzhIamwvN
— TheCityUK (@TheCityUK) May 20, 2019
Glen said: “Last month saw the first ever masala bond issued by a sub-sovereign Indian entity and they chose to do it here in London.”
In February the Green Growth Equity Fund, a new UK-India venture, invested more than £150m ($191m) in Ayana Renewable Power. Glen expects the fund to raise up to £500m of international investment through the City of London to support sustainable energy initiatives on the sub-continent.
In the same month the government also launched the first UK-India joint working group on fintech to identify mutual opportunities.
The minister continued that the UK is natural partner for China to help finance its Belt and Road initiative.
“Over the past decade we’ve established the UK as the leading financial services partner for China, and London as the leading global centre for renminbi trading,” said Glen. “And next month in London we will use the tenth annual Economic and Financial Dialogue between our two countries to deepen that relationship.”
Stuart Williams, president of ICE Futures Europe, spoke on a panel at the conference and warned that the focus on Brexit is preventing the City of London from focusing on global challenges.
“The bulk of GDP growth in the next 20 years is going to come from Asia… The way we consume is changing, the world is becoming more electronic” – Stuart Williams, President @ICE_Markets #CityWeek2019 pic.twitter.com/lfB7l14uJv
— City Week (@cfcityweek) May 20, 2019
Williams said: “The danger of Brexit is the extent of navel gazing. The biggest challenge is that demand is shifting to Asia and supply needs to change.”
Glen admitted that the UK’s departure from the European Union looms over the outlook.
— TheCityUK (@TheCityUK) May 20, 2019
He said: “You won’t be hearing rhetorical gymnastics from me today to try to disguise the fact that we are not where I’d hoped we’d be in terms of Brexit. I know the City wants and frankly deserves certainty, and I’m sorry I can’t give you that today.”
However Glen added that the impasse in Parliament should not hold the City of London back.
EU27 trading operations and risk management are moving to Amsterdam due to Brexit.
By introducing a time limit, the EU is keeping some leverage over the UK.
CCPs will need to give notice by September if access is revoked due to Brexit.
There are less than six months before the end of the transition period.
Negotiations are ongoing on equivalence decisions.