Her Majesty's (HM) Treasury announced actions to address climate change and boost investment as part of the 11th Economic and Financial Dialog (EFD) between UK and India. Both countries welcomed the launch of the Climate Finance Leadership Initiative (CFLI) India partnership to mobilize private capital into sustainable infrastructure in India, including clean energy like wind and solar power and other green technologies. Thus, ahead of the UK hosting the COP26, the UN climate conference in November 2021, the UK government has announced action to help drive green growth in India, including a USD 1.2 billion package of public and private investment in green projects and renewable energy; this package includes a new USD 200 million private and multilateral investment into the joint Green Growth Equity Fund, which invests in Indian renewable energy.
The CFLI partnership will be led by a group of leading financial institutions responsible for USD 6.2 trillion of assets and chaired by Michael Bloomberg, the UN Special Envoy on Climate Ambition and Solutions. CFLI India plans to launch an ecosystem of country-relevant technical assistance initiatives, sustainable infrastructure project preparation and pipeline development, and support financing vehicles and funds to facilitate accelerated private capital mobilization at scale for India’s low-carbon, climate resilient development. Focusing on private-sector financing of sustainable infrastructure projects in specific low-carbon sectors to support India’s ambition of meeting their nationally determined contribution, CFLI India will deliver impact by
- Directly mobilizing capital through existing or new equity financing vehicles, co-created with local stakeholders and tailored to India’s market needs, over the life of the CFLI India, to catalyze sustained private investment at scale.
- Advancing public-private collaboration by partnering with the government of India and the multilateral development finance institutions to address a targeted set of sector-specific policy opportunities to strengthen the enabling environment for private capital in India. Through this collaboration, CFLI India seeks to reinforce international investor confidence in India’s low-carbon transition, opening access to rapidly growing offshore pools of sustainable capital.
In addition, HM Treasury published a summary note on the application of social discounting to environmental impacts. The Green Book Review 2020 announced an expert, external review to examine the application of this discount rate to environmental impacts, considering the interaction with valuation approaches. HM Treasury consulted leading economic experts and the review concluded that the Green Book should not change the discount rate for environmental impacts. Social discounting allows proposals of different lengths and with different profiles of costs and benefits to be compared on a common basis. The Green Book’s social time preference discount rate measures the rate at which society values the present compared to the future and provides a time series of discount factors that are applied to costs and benefits in appraisal.
- News Release on UK-India Financial Dialog
- Statement on Launch of CFLI
- Note on Environmental Discounting
- Green Book and Related Documents
Keywords: Europe, Asia Pacific, UK, India, Banking, Securities, Climate Change Risk, ESG, Sustainable Finance, CFLI India CFLI Partnership, COP26, Low-Carbon Economy, HM Treasury
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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