Vision for Economic Growth — a roadmap to prosperity 33 The investment gap to 昀椀nance the transition to net 4. Anchor the UK as a leader Demonstrating leadership in sustainable 昀椀nance can zero and the protection of nature and biodiversity help to consolidate the UK’s role as the “go-to” partner is daunting. In 2021, the International Energy Agency in sustainable finance for 昀椀rms and countries when it comes to transitioning (IEA) estimated that annual clean energy investment to net zero, protecting biodiversity, and delivering on worldwide would need to more than triple by 2030, other sustainability-related goals. It is also worth noting 96 and a recent estimate puts the 昀椀gure at US$4.6tn. that the ultimate success of the UK as a centre for But capital 昀氀ows today are nowhere near the levels Impact by 2030 sustainable 昀椀nance will be in no small part determined required to transition to a more sustainable energy UK-based FPS has a strong track record in supporting businesses globally to decarbonise by the overall vibrancy of its capital markets. As the UK and reach other sustainability-related goals, through the provision of financing, investment system (see Figure 12). One estimate from 2022 put considers a range of reforms to protect and enhance the the UK’s investment gap for the transition as being up and expertise. The UK is also a leading centre for scaling innovative approaches including competitiveness of its capital markets more broadly, it 97 Also, within the UK alone, there is to £111bn by 2030. high-integrity carbon and nature markets. is important that these are developed in lockstep with an estimated 昀椀nancing gap to meet nature-related the policy measures needed to seize the opportunity of outcomes targeted in UK policy of at least £44-97bn anchoring the UK as a leader in sustainable 昀椀nance. 98 Context To close these gaps, the UK needs to unlock by 2032. E昀昀orts are underway as part of the Financial Market Law The UK is a pioneer in sustainable 昀椀nance. It has public and private capital at scale through predictable experience in 昀椀nancing the transition and sustainable Committee (FMLC) working group to explore potential and durable energy and industrial policies. development, adopting the necessary policies and clari昀椀cations around 昀椀duciary duty in the context of 94 best practice frameworks. This enables the UK to set sustainability objectives (such as the net zero transition). Financial market infrastructure providers are also looking a global example. It was the 昀椀rst G7 country to require Figure 12: Global clean energy investments — current versus required to reach net zero by 2050 to support broader sustainability goals. For example, disclosures aligned to Task Force for Climate-Related US$ trillion (2022) the London Stock Exchange was the 昀椀rst exchange in Financial Disclosures (TCFD) recommendations and Level of global clean energy investment required annually to reach net zero by 2050 ~4.6 secured support for the launch of the Taskforce on the world to use a public market framework to facilitate Nature-Related Financial Disclosures (TNFD), as part funding in climate mitigation projects that create carbon 93 95 of the UK G7 presidency. credits, via its voluntary carbon markets designation. ~1.7 ~1.6 ~1.4 ~1.2 ~1.3 ~1.1 ~1.1 ~1.1 2016 2017 2018 2019 2020 2021 2022 2023e 2030 O昀昀shore windfarm at Redcar NB 2030 昀椀gures refer to IEAʼs Net Zero by 2050 Scenario Source: IEA (2023), World Energy Investment 2023, IEA, Paris https://www.iea.org/reports/world-energy-investment-2023, License: CC BY 4.0