Featured Product

    HM Treasury Publishes Green Financing Framework in UK

    July 02, 2021

    HM Treasury and the UK Debt Management Office (DMO) published the UK government green financing framework, which describes how the UK government plans to finance expenditure through the issuance of green gilts and the retail Green Savings Bonds; these instruments are expected to be critical to addressing climate change and other environmental challenges, funding much-needed infrastructure investment, and creating green jobs across the UK. This framework sets out the basis for identification, selection, verification, and reporting of the green projects that are eligible for financing from the proceeds of the green gilt program and the retail Green Savings Bonds of the government.

    The framework aligns with the 2021 International Capital Market Association (ICMA) green bond principles. In addition, HM Treasury intends to align this framework with the UK's developing classification of environmentally sustainable economic activities (UK Taxonomy). According to the framework, HM Treasury intends to allocate the proceeds raised from any green gilt, Green Savings Bonds, or other specified green finance instrument to finance and/or to refinance, in whole or in part, expenditures that meet the environmental eligibility criteria set out in this framework. The evaluation and selection of eligible green expenditure will be done annually by HM Treasury, in consultation with the other relevant government departments. HM Treasury will be responsible for updating the list of potential eligible green expenditure each year, spanning the eligible expenditure window. HM Treasury intends to allocate the proceeds of all green financing to eligible green expenditure within two budget years from the date the relevant green financing is raised.

    To enable investors to follow the progress and positive impact delivered, HM Treasury intends to publish an annual allocation report on its eligible green expenditure and an at least biennial impact report setting out the environmental impact and social co-benefits. The two independent reports assessing the framework and the eligible government expenditure have been published alongside the framework:

    • In line with market best practices, V.E, which is part of Moody’s Environmental, Social, and Governance (ESG) Solutions, has provided a Second Party Opinion on the sustainability credentials of the green financing framework; it assesses alignment of the framework with the green bond principles 2021 published by the International Capital Market Association (ICMA). V.E expressed a "robust" level of assurance on the contribution of the framework to sustainable development, which is the same positive assessment achieved by major sovereign issuers. V.E also assessed the UK’s ESG performance as "advanced," the highest level on V.E’s four-point scale.
    • The Carbon Trust has produced a Pre-Issuance Impact Report on the green financing program, which reviews the government’s intended allocation of proceeds under the framework and the proposed impact metrics. They found that the allocations "align sensibly" with the Climate Change Committee’s recommended climate targets for the UK (known as its Sixth Carbon Budget) and they are "confident that the program will contribute to achieving net zero by 2050." This is the first report of its kind among sovereign issuers and provides additional evidence of the coherence of the government’s green financing program with its wider environmental agenda.


    Related Links

    Keywords: Europe, UK, Banking, Insurance, Securities, Green Financing Framework, ESG, Climate Change Risk, Green Bonds, Reporting, Sustainable Finance, HM Treasury

    Featured Experts
    Related Articles

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793