Innovate Finance response to HM Government update to Green Finance Strategy call for evidence

19th July 2022 | Reports

About Innovate Finance 

Innovate Finance is the independent industry body that represents and advances the global FinTech community in the UK. Innovate Finance’s mission is to accelerate the UK's leading role in the financial services sector by directly supporting the next generation of technology-led innovators. 

The UK FinTech sector encompasses businesses from seed-stage start-ups to global financial institutions, illustrating the change that is occurring across the financial services industry. Since its inception in the era following the Global Financial Crisis of 2008, FinTech has been synonymous with delivering transparency, innovation and inclusivity to financial services. As well as creating new businesses and new jobs, it has fundamentally changed the way in which consumers and businesses access finance. FinTech is now applying that approach to the climate challenge.

In 2021, Innovate Finance published a white paper on the role of FinTech in achieving Net Zero. Innovate Finance is a signatory of Tech Zero, with a commitment to achieve Net Zero emissions in its operations as quickly as possible. Innovate Finance is committed to working together with governments, regulators, legislators and other policymakers and key stakeholders and in its external communications to promote action and market innovation to tackle climate change, achieve Net Zero and develop climate resilience. Innovate Finance champions FinTech solutions to climate change and encourages and supports the FinTech ecosystem to further develop Net Zero solutions. 

Throughout this response Innovate Finance has included case studies of ways in which FinTechs are already providing Net Zero and green finance solutions, to bring to life how technology is a fundamental part of green finance.

Innovate Finance responses to consultation questions

Capturing the opportunity

1. What are the key characteristics of a leading global centre for green finance?

Over the last ten years, the UK has built a leading global FinTech centre. It now has the opportunity to be the leading global centre for green finance by turning its world-leading FinTech ecosystem into a world-leading green FinTech ecosystem.  

The key characteristics of this leading global centre for green finance are:

  • digital and data-led
  • based on trust, transparency and assurance, enabled by technology
  • innovative - a test bed for new services
  • joined up across financial services 
  • supporting transition in every household and every small business
  • powered by open data across the whole economy

This is a huge international opportunity for the UK economy. Just as the UK consistently attracts more investment in FinTech than any country in the world after the USA, there is a strong platform for green FinTech to further strengthen the UK’s global attractiveness and investment. Green FinTech also has huge export potential. 

The products and services offered by UK FinTechs are already enabling companies, financial institutions and consumers around the world to track and reduce their emissions and to invest in Net Zero transition. 

Green Finance is Digital and data-led

A leading global centre for finance will be powered by technology, with FinTech innovators at its heart. Just as Net Zero will be achieved through finance – deploying capital to activities and investment that enable or achieve Net Zero – it will also be achieved by technology.  

Net Zero goals will be achieved as capital moves away from climate risk and toward the greater asset value of Net Zero solutions, as consumers take action, and as financial regulation in key capital markets drives change through global portfolios and supply chains. 

The enabler of all of this will be financial technology and innovation. Above all, to achieve impact at scale, it will require transformational technologies, thinking and innovation in areas such as:

  • data to improve completeness, consistency and transparency
  • artificial intelligence to unlock solutions; 
  • digital interfaces for easy adoption; 
  • blockchain providing accounting and assurance; 
  • data like satellite imaging for real time assessment of supply chains and investments. 

Institutions are reassessing how they implement ESG. Today disclosure reporting is still prepared via manual spreadsheets in many cases. A leading global centre for green finance will be data driven and automated - the faster we move to this in the UK, the stronger our position in green finance. That means moving towards more frequent or real-time reporting, which will drive the adoption of data solutions.

The first phase of Net Zero finance has focused on measuring and reporting emissions. The next phase is about Net Zero action and reconfiguring financial markets: to divert capital to funding transition and those activities and organisations that are actioning Net Zero aligned transition plans. That means readily available data on the progress towards Net Zero for any financial transaction, whether a global investment portfolio or a purchase at a corner shop.

A global centre for green finance will be one where robust data, capturing emissions and Net Zero transition, is integrated into every aspect of capital markets, financial transactions, and regulatory reporting.

Data analysis underpinned by FinTech can identify the climate impact of each contract or financial instrument, and the cumulative impact of portfolios and balance sheets.

Technology-enabled trust and assurance

A global centre for green finance will depend upon trust and confidence - of the market, consumer and investors. This will increasingly require robust assurance of reporting accuracy and protections against ‘greenwashing’. 

FinTech will provide assurance solutions that underpins green finance. Greenwashing is currently possible because data is not understood or fully verified. The UK is already seeing the development of FinTech services (including those tested in the FCA Sustainability digital sandbox) that use technology such as blockchain to build transparent and secure records of investment impact and supply chains, together with satellite imagery to verify sustainability claims and impact through supply chains and around the world. 

Innovative: a test bed for new services

In order to develop and provide new financial services that support Net Zero across the globe, the UK must be at the forefront of innovation. That includes creating a regulatory and policy environment that enables and accelerates innovation. 

The UK has led in requirements for financial disclosures, which has stimulated innovation. This should continue to bake climate action into investment portfolios. It also means developing the UK’s wider innovation and data rules to enable innovation. Some of these, including open data, are detailed below.

Regulators should make it mandatory to provide disclosures in a machine-readable format, which would enable more efficient data analysis, and support and incentivise automation of climate-related regulatory reporting. This goes beyond financial services and financial regulation and needs to link policies on data, climate and finance.

In future, a leading green finance centre will also be one that enables a circular economy. This requires rewiring supply chains and financial modelling, with new types of investment needed between businesses. Technology can help. As the circular economy develops, FinTech has a critical role to play. 

Joined up: UK green finance as more than the sum of its parts

The UK has enormous strengths in green finance across financial services, including asset management, capital markets, banking, payments systems, insurance, commercial risk, professional services and FinTech. As a global leader, the UK needs to be more than the sum of its parts. Green finance is still developed in silos to some extent. The more the UK finance ecosystem can collaborate and integrate approaches, the more value will be created, and the faster progress towards developing solutions will be.

For example, there is significant climate analysis and risk assessment capability in commercial risk brokers which could be applied to help develop solutions in banking and asset management. Technology solutions could help scale these. The UK’s green finance strategy must take a joined up approach. Technology could be one of the ways in which the UK quickly develops learning across financial sectors.

Green finance and sustainability should be a core objective of the new Centre for Finance Innovation and Technology (CFIT), underpinning everything it does. Together with the Green Finance Institute and British Business Bank, this should include linking firms in the ecosystem to enable those who want to do more to learn from others and develop green finance solutions and products.

Supporting transition in every household and SME

The initial phase of green finance has been focused on large institutions and corporates. Achieving Net Zero will depend upon transition pathways for every small business and every household. This requires micro solutions; affordable options to ensure a fair transition. 

FinTech is uniquely suited to provide consumers and SMEs with accessible, affordable analysis to identify Net Zero impact and priorities and targeted access to finance for transition. UK FinTechs are already providing: plug-in tools for retailers and payment services that link emissions with spend, easy to use analytical tools that enable small firms to measure emissions through their supply chain and identify a Net Zero action plan, and funding options that link green finance to SMEs for transition investment. 

Beyond the analysis and insights provided by FinTechs, there is still more work to be done by government and industry to address the knowledge gap in terms of where SMEs and individuals can locate low-carbon solutions provided by suppliers, installers and manufacturers in their local area.

FinTechs can play a pivotal role in supporting SMEs and consumers to make these connections. In parallel, FinTechs can build understanding and reduce friction or barriers to action through convenient and traceable digital journeys, with finance and payments embedded.Data-led, across the economy

Above all, green finance will be data led. This will require data across the whole economy, connecting to financial systems. Open data – or smart data – will be critical. This will require access, analysis and exchange of data across sectors and across borders.

FinTechs are providing Net Zero solutions that use payments data to measure and analyse carbon footprint. This could be expanded and combined with retail data (so a consumer can assess the footprint of each item in their shopping basket), energy usage or google location data, allied with behavioural data from social media. Similarly, assets managers could be provided with analysis that combines finance data with transport, built environment, water and agricultural data.

In order to achieve this, a world leading approach to open data across the UK will be required, together with regulation of AI approaches that provide confidence and trust, and provisions in trade deals and UK data governance that enables cross border applications and meets international standards of data protection. 

In the UK, this will require a legal right to open data and digital ID, building on the existing GDPR right to data to mandate and incentivise businesses to share data (on commercial terms). This could include a requirement on data owners to publish metadata, so innovators can see what data others hold, and a regulator to oversee fair access when commercial terms cannot be mutually agreed between a service provider and a data owner. Digital ID for consumers and development of digital company identifiers will enable further innovation in tracking individual and company emissions and Net Zero transition.

The UK has a leading FinTech industry with global reach. Green finance will be technology enabled and data led. The UK therefore has the opportunity to turn its leading role in FinTech into a leading role in green finance. Above all, this means the government and regulators should recognise the critical role of technology in green finance and progress actions that further enable the development of world leading data solutions. 

2. Do you consider the UK’s green finance regulatory framework to be world-class? 

Further actions need to be taken by Government and regulators to ensure that the UK has a world-class regulatory framework that enables and accelerates green finance. This regulatory framework should:

  • encompass not only financial regulation, but also wider digital regulation, including open data;
  • extend disclosure requirements from measurement of emissions to action on emissions reduction and Net Zero transition;
  • extend disclosure requirements from the asset portfolios of large financial institutions to all capital markets and financial services (including consumer credit, SME lending and payments); and
  • enable digital solutions and enable reporting to become model driven and machine executable (via the development of machine readable regulatory rulebooks).

In order to achieve the above regulatory framework, Innovate Finance recommends that the following actions be taken:

1. Fit for purpose: updating existing rules

2. Fit for the future: Enabling innovation 

3. Innovative, agile regulators

Align regulation of all financial services to Net Zero targets,  e.g. extending disclosure rules to climate action and from large institutions to all financial services. Regulation of new technologies, such as cryptoassets, should also be aligned to Net Zero targets.

Access to data:  introduce Consumer Data right across the economy to create economy-wide open data – unlocking new FinTech solutions to Net Zero. Support this with legislation for Digital ID.

Reform regulators’ capability, capacity and culture to underpin the new secondary competitiveness objective and ‘have regards’ with respect to Net Zero. This should include statutory benchmarking reports, capability reviews and industry interchange.

Reform out of date legislation and programmes: review regulation to remove barriers to Net Zero solutions. In addition, Government financial interventions (e.g. SME lending guarantees) should be aligned to Net Zero, in turn stimulating innovation in debt and VC markets.

Enable RegTech solutions.  Enable machine readable ESG data. Apply a RegTech test to green finance regulation: a requirement for all new regulations to consider how best to enable SupTech/ RegTech solutions.

A joined-up approach  across regulators and government: UK financial regulators should actively participate in a joined-up strategy to advance the opportunities of Net Zero in UK financial services. 

Reform capital requirements, risk ratios and insurance risk principles to reflect climate and transition risks, and to ensure that approaches to financial risk do not obstruct industrial innovation (e.g. Net Zero transition will require the application of untested technology e.g. hydrogen power where a track record of risk measurement will simply not be available). 

Create a vibrant and trusted UK market in synthetic data, which is critical to development of new products and services.

Support innovation, including start-ups and scale ups: maintain ‘always on’ sustainability sandbox and ensure access to firms of all sizes.

Innovate Finance considers that there are particular opportunities for the UK’s regulatory system to support the development of Supervisory Technology, enhanced data analysis and further innovation. This includes:

  • Adopting more technology-led ways in which to monitor compliance with the new FCA sustainability disclosure and investment labels requirements. FCA TechSprints on model driven, machine readable and executable regulatory reporting have proven that the regulator and regulated firms can build a workable model where real-time updates can be shared by firms. Technology-driven supervision could offer a real-time, or near real-time, way in which to determine the efficacy of the new regime. Innovate Finance notes the Digital Sandbox explored the use of digital ledger technology in the context of assurance for market participants’ ESG data - we would also encourage the regulator to explore the extent to which embedded supervision (a framework that allows compliance with regulatory requirements to be automatically monitored by reading the ledger, reducing the need for firms to actively collect, verify and deliver data) can be deployed. The FCA should assess lessons learned from the ESG digital sandbox in developing the proposals.
  • Consider sharing - subject to market participants’ consent - anonymised, aggregated data sets, and make it mandatory to provide disclosures in a machine-readable format. Making it mandatory to provide disclosures in a machine-readable format would allow ease of monitoring and supervision of the new regime, more efficient data analysis, and also creates new opportunities for regulatory technology solutions to be developed by the private sector. Additionally, if market participants’ data sets were made available (in a similar vein to the synthetic data sets provided to participants in the regulator’s Digital Sandbox), then this could unlock further innovative solutions. There are already fantastic use cases that leverage available data; one of our members, for example, has been working with partners to model and categorise transactional data (e.g. carbon numbers associated with ISIN numbers), which has revealed valuable insights about the broader value chain.
  • Support and incentivise firms’ automation of climate-related regulatory reporting. We invite the FCA to support and incentivise firms to switch from manual reporting (via spreadsheet) towards more innovation-led solutions for climate-related reporting, whether developed in-house or by third party providers. The underlying aim should be to drive the production of high quality data sets, which is central to assurance and the development of new, innovative products, while ensuring reporting is not overly burdensome to firms. Innovate Finance members consider that data from all market participants - be they small, medium or large firms - is essential in order to drive impactful change. To that end, the FCA’s approach to incentivising the move to innovation-led reporting needs to provide sufficient lead time to small and mid-size firms, enabling them to prepare and invest in reporting-related solutions.
  • Consider data beyond banking and finance as a source for experimentation and innovation. The UK has the leading academic institutions in the world including some of the world’s leading specialists on climate impacts and trends alongside some of the most powerful and advanced systems dedicated to weather and climate via the Met Office. Exploring how to best harness the combined data capability and creativity of across academia, FinTech, public sector and established institutions (in financial services and beyond) could be pivotal to creating the scale of cross sector collaboration needed to rapidly accelerate the transition.  

3. To what extent does the UK’s private and public sectors have appropriate skills/capacity to attract international green finance flows?


4. What are the UK’s comparative strengths and weaknesses in its green finance offering compared to other international financial centres? What are these are for:

a) Asset management
b) Capital markets
c) Banking
d) Insurance
e) Professional services
f) FinTech:

The UK is a leading global centre for FinTech, which puts it in a strong position to influence and support action domestically and globally to accelerate the transition to Net Zero.

The diversity of innovation and talent, combined with increased competition, has created a concentrated ecosystem of FinTechs in the UK. These companies have demonstrated their capability to work independently and collaboratively, with peers and incumbent brands, to transform all aspects of the financial system from digital user experience to risk management and decision making.  

This ecosystem has the power to be a differentiator for the UK. The examples of FinTech companies highlighted in this response represent a fraction of the innovation taking place in the UK market. 

The UK government should be encouraged by emerging and scaling FinTechs focused on accelerating the Net Zero transition. The government should consider strategies to support, showcase and scale FinTech solutions already in market, while proactively engaging the FinTech community more broadly for inspiration and targeted innovation. 

As referenced more widely, the 2021 FCA Green FinTech Challenge recognises the opportunity that FinTech represents.

UK FinTech has notable strengths and a proven track record across the following areas:

i. B2B: Tools and Technologies for Businesses

As has been proven in other areas of the market, collaboration across the sector can accelerate the scale and impact of innovation. With respect to the UK government’s Green Finance Strategy, UK FinTech firms can provide goods and services to other businesses as a means of supporting their transition to Net Zero. 

Opportunities include:

  • Use of AI in CO analytics and measurement helping to address quality and consistency and use of data. 
  • AI to assess and provide assurance on science based emission targets within supply chains or investment portfolios,
  • Distributed Ledger Technology and blockchain for supply chain assurance and verification,
  • Plug-ins to other financial services, such as payment platforms or procurement systems. This is a rapidly growing area, including FinTechs such as: Joro (algorithms that calculate consumer emissions) and Plaid (the open banking platform) provide spending analytics to give insights into how purchases are contributing towards carbon emissions.
  • Embedded FinTech that connects objects and financial services. For example, building on smart meters to integrate finance, energy and emissions information and management.

FinTechs have the capability to provide the tools, infrastructure and technology solutions for financial institutions to take action on climate change. This will provide transparency on emissions across portfolios, assessing and mitigating risk in individual transactions, supporting investment decisions and portfolio management, and enabling the customers of financial institutions to adapt.

ii. Climate RegTech: Compliance for Financial Services Regulation 

Focusing on transition to Net Zero will now put businesses and services in a favourable position going forward. Increasingly, the US, UK and the EU are introducing regulation on climate risk disclosure and reporting for financial services. This applies particularly to asset managers and banks. This regulation is likely to increase after COP26. 

In the UK, the Bank of England has issued supervisory expectations for sustainable reporting on climate-related risks, and has set up a Climate Financial Risk Forum with the FCA, to build capacity and share practices for risk reporting. Preparations include robust toolkits to deal with climate-led financial risks. As part of this, the stress testing framework is used to assess the impact of climate risks on the UK financial system. The Bank of England’s Climate Biennial Exploratory Scenario (CBES) considered resilience to both physical and transition risks in response to stress tests, with media coverage attracted to the potential worst-case scenario climate related losses for the UK’s largest banks and insurers in excess of £340bn by 2050.

FinTech is already playing a huge role in the area of financial compliance. Tools for robust climate and transition risk disclosure and portfolio assessment ensure firms comply with regulatory requirements. FinTech enables reporting on disclosure and ability to look at risk and provides assurance to make sure that the assessments are reliable. This signals compliance to regulatory bodies, other financial institutions, investors and clients. FinTech can provide financial regulators with the tools and software necessary to monitor and test compliance, as well as providing modelling and data to support supervisory and policy insight, and decision-making. 

In an area of rapidly evolving regulation, RegTech can help financial institutions keep up to speed with new requirements. For example, CUBE, a UK-headquartered RegTech company, provides a regulatory intelligence platform using AI, including machine learning and natural language processing, to support financial institutions in navigating regulatory change and processes, enabling them to respond to ESG regulations as they continue to evolve.

iii. B2C: Enabling consumers to take action

Consumers have a significant role to play in the path to Net Zero through their personal finances, their shopping and consumption, and measuring and mitigating their environmental impact. The services provided directly to customers that support them on this journey are growing in both popularity and sophistication. 

Financial transactions are fundamental in understanding how consumption affects climate change. It is incredibly powerful for consumers to see how their spending is linked to the environment. FinTech can equip consumers with insights into the environmental impact of their spending, thus supporting behavioural changes. In this use case, bank accounts can integrate action to mitigate carbon footprints, for example:

  • Oxbury Bank has launched the Oxbury Forest Saver, which is the UK’s first personal savings account to use interest earned on savings as incentive to plant trees.
  • Personal wealth management can be guided towards assured investment in sustainable or green solutions - enabling people to invest their money in assets that help achieve Net Zero.
  • Personal finance management tools can support individuals in making their own contribution to Net Zero. Further, links to non-financial services also have a role here in adjacent sectors such as smart metres from utility providers can show the impact of daily behaviour on a customer’s energy consumption.

iv. Embedding Net Zero into Capital Markets 

The first stage of green finance has centred around transparency and reporting, with the next phase focussing on directing capital. Financial markets will need to be reconfigured in ways that fully account for climate and transition risk, accelerate the achievement of climate targets, and build climate resilience, including:

  • Finance and de-risk the development and adoption of new technology and services that support Net Zero Transition (e.g. hydrogen applications),
  • Finance low and no-carbon projects and services (e.g. offshore renewables and circular economy products and services),
  • Fully price-in physical climate change risk and transition risk,
  • Finance Net Zero transition, including adaptation of people’s homes (e.g. replacing fossil fuel heating), and Net Zero transition in small businesses,
  • Align the provision of finance (including lending, investment and insurance) to individual customers’ progress against science based Net Zero targets. For example, linking interest rates or availability of loans to a business’ commitment to, and progress against, a science based Net Zero transition plan.

FinTechs are also playing a role in driving innovation to transform and support Net Zero capital markets. For example, FinTechs are introducing new business models such as e-trading of natural capital backed digital assets, remote verification insurance and financing, gamified sustainable behaviours and sustainability AI advisors. This is one area where the UK is at an early stage, and thus limited capital market examples at scale that are fully aligned to Net Zero. However, this represents an area of opportunity for the UK given its leading position as a global financial centre.

v.  Emissions within FinTech industry

This is deemed to be an area where the UK has a mix of strengths and weaknesses, albeit the weaknesses are reflected in other regions. 

To help other businesses transition to Net Zero, FinTech companies need to lead by example and reduce their own emissions. This should cover the three categories of direct and indirect emissions a business is responsible for: scope 1 (direct emissions produced, e.g. by your vehicles or boiler); scope 2 (indirect emissions, e.g. energy consumed) and scope 3 (value chain).

FinTech companies, such as challenger banks Starling and Revolut, payments firm Wise, and RegTech firm Onfido, have joined Tech Zero, a group of innovative UK tech companies working to accelerate the progress towards Net Zero. Companies who join Tech Zero commit to measuring their scope 1-3 emissions and set an ambitious Net Zero target by the end of 2021. In order to support UK FinTech with measuring scope 1-3 emissions and developing plans Innovate Finance is working with Capgemini Invent to pilot a scope 3 emissions workshop. This is focused on improving understanding and engagement of these issues among members of Innovate Finance, and by extension, the UK FinTech community at large.

It is vital for businesses to think about what scope 3 means – looking at emissions across supply chains, from suppliers through to the end use by customers. Crucially, scope 3 emissions include investment. Companies must be prepared to measure and assess emissions across any financial services portfolio (debt, equity or other financial services including insurance) and to factor this into investment and credit decisions.

Emissions targets and plans across these categories should be ‘science based’ and align with global targets. This means that milestones and progress for each activity should be based on what is needed to achieve a global Net Zero economy by 2050 at the latest - taking account of the specific pathway and pace of change possible in each activity or sector and in a way that is sustainable across the economic system (e.g. reserving offsetting solutions for those activities that have the most difficult Net Zero trajectories).

Financial services should not only measure the emissions across their investment portfolios. They should also ensure that investments align to sector-relevant science based Net Zero targets and demonstrate progress against these.

One of the issues facing the tech industry in reaching Net Zero is the energy intensiveness of blockchain, AI, the cloud and big computing. Bitcoin consumes nearly 100 TWh per year of electricity - more than the energy consumption of Belgium, and one and a half times as much as all televisions in the USA. This is not just an issue for cryptocoins. Data centres use 200 TWh per year. Cloud computing may be more efficient than data centres but has a growing energy consumption, material and land use. Ever more powerful computing, including AI, is fuelled by more energy. In the long term, solutions cannot just be reliant on renewable energy and carbon offsets. Instead, a reduced energy usage will be needed.

The crypto coin Ethereum is working on a “proof of stake system” (where ‘mining rights’ are linked to existing stakes) to replace the energy intensive “proof of work” system traditionally used in cryptoassets (where miners solve complex computation puzzles, using significant computing power and energy). Similarly, the Convex Foundation has launched the world’s fastest and high volume distributed ledger technology that replaces “proof of work” with convergent “proof of stake” systems. This drastically reduces energy usage and costs of transactions, which cost less than a cent (rather than dollars) and can take place in less than a second. This enables decentralised finance, gaming and other digital currency apps to reach global-scale performance efficiently and at low cost.

5. How can the UK government measure progress towards becoming a leading global centre for green finance?

For the UK government to measure its progress towards becoming a leading centre for green finance, it will require an approach that reflects the urgency to create new and innovative products and services to finance the transition. In parallel, the UK government will need to address the impact of new financial solutions alongside the  transition of existing financing to achieve more sustainable outcomes and drive systems change in the markets and sectors that it supports. 

In order to achieve accurate measurement, the UK government should consider new approaches being pioneered by FinTechs, both independently and in collaboration with established brands, alongside leveraging recognised sources of market insight with long standing historical data with the power to assess the impact of its strategies. This approach could improve understanding of shifts in behaviours, attitudes and sentiment alongside the impact of investment into priority areas identified in the UK government's strategy.

For example, an existing source of insight for SME lending is the long established SME Finance Monitor, led by BVA BDRC, that was developed during the financial crisis to provide critical and regular insight into SME attitudes and access to finance.  This has grown to become an industry-leading source for SME finance trends with extensive detail on topics such as sources of finance, financing needs, attitudes to finance and types of finance. With long standing time series data since the financial crisis, and through the Covid-19 pandemic, this could be a powerful platform for the sector to improve understanding, collaborate to improve action and measure impact.  

Importantly, the SME Finance Monitor is already an extensive survey on SMEs that covers many topics, meaning care will need to be taken when revisiting the purpose and priorities with the existing stakeholders in the context of UK governments long term ambitions for Green Finance. Leveraging such a tool to enrich the quality of data and insight could be an important catalyst for targeted innovation into high potential growth and high carbon impact sectors of the UK economy while also helping to ensure support is provided for new scale up SMEs that are critical to enabling the new economy and wider systems change such as circularity. 

Additional sources of information or benchmarks with potential to support UK government with the development of accurate or directional measurement could include:

  • Adoption of green finance products and services by consumers, business and corporates.
  • The development of a tracker to measure the flow of investment and funding to new and existing climate related FinTechs providing solutions that accelerate Net Zero transition. This could also extend to UK based climate led FinTechs operating in markets outside of the UK as a measure of the UKs influence on the global stage as a leader in Green Finance and Net Zero transition.
  • Tech enabled contribution to overall UK benchmarks as a leading centre for green finance.
  • Clarity on the UK taxonomy, in particular on green investment classifications and labelling, with a specific focus on the impact on both existing and future investment in Net Zero projects and businesses. 
  • Insight into funding for new and emerging SMEs that are scaling up practices and business models that are critical to the circular economy. 

6. What areas for potential growth – for example emerging financial products and instruments – are there in green finance for the UK financial services sector?

Please see Innovate Finance’s answer to question 5 for understanding of approaches that could provide new insight and data to support the design, development and/or scaling of new financial products and instruments.

Financing the UK’s energy security, climate and environmental objectives 

7. How can the UK support a financial system that leverages private investment to meet the UK’s climate and environmental objectives? 

A case study of how digital bank Oxbury works with the UK agriculture and food sector is set out below. This is an example of how technology-based financial services can work with a specific sector to achieve climate and environmental objectives. 

Digital services are particularly well placed to reach specific sectors and provide targeted solutions across the UK. This approach could be extended to other sectors, perhaps with encouragement from the government and regulators. As noted elsewhere in this response, the government and regulatory action to enable open data across the economy (or ‘smart data’ initiatives) will enable the connection of financial data with ‘real economy’ data to enable more accurate, cheaper and faster measurement and reporting and can unlock tech-based solutions that support Net Zero transition pathway plans.

For this to scale, the innovation from new entrants like Oxbury need to be replicated in other high carbon sectors such as buildings and real estate (Net Zero property), fashion/textiles, manufacturing etc. The government could support this by linking green FinTech to government sector based strategies: ensuring sector strategies for Net Zero (including transition plans) include engagement of Financial Services to align with financing the transition and transitioning existing finance.

Case study: Oxbury

Oxbury Bank is the only FinTech dedicated entirely to British agriculture and the food supply chain and has had a commitment to Net Zero from inception. Oxbury provides specialised lending and payment solutions exclusively to farmers, agri-food businesses and the rural economy. The agricultural industry has an important journey to reach Net Zero - the National Farmers Union has set a target for 2040. Oxbury leverages its proprietary core banking, data management and banking-as-a-service infrastructure to facilitate this transition by providing capital to the industry through climate initiative lending. This includes lending focussing on specific farming needs such as carbon sequestration projects and animal welfare improvements as well as renewable energy projects and infrastructure and productivity improvements. Oxbury is working on building a payments ecosystem to support the farming community as the solution to net-zero transition for other sectors via nature-based solutions to address the wider economy’s scope three emissions and biodiversity net gain.

Activities include:

Knowledge-sharing: Oxbury is a premium partner to Farmers Weekly’s Agriculture Transition project designed to upskill the industry on changing policy and management practices  

Product design: Oxbury Forest Saver, the UK’s first savings product that enables customers to use deposit funds to plant trees in lieu of earning interest on their savings. These trees are only planted in the United Kingdom in accordance with the internationally recognised leading standard of the Woodland Carbon Code, not only thereby sequestering carbon, but enhancing biodiversity and delivering natural capital assets of cleaner air and water as well as assisting rural communities through supporting employment opportunities. The product was piloted in 2021.

Product categorization: all lending products are to be categorised as to their emissions profile, first of all on a qualitative basis and eventually on a quantitative basis. 70% of loans made in 2021 were allocated for climate positive aligned purposes including development of renewable energy. 


Pilot projects:  Working with industry partners in the food supply chain and a select group of farmers in both the diary and arable sectors, these projects fund and demonstrate how farmers can enhance their production methods in order to lower emissions and access nascent carbon markets. 

Renewable energy:  involvement in a marketplace for the financing of rural renewable energy projects.

8. How can the UK support a financial system that leverages private investment to meet the objectives of the British Energy Security Strategy, including in areas such as nuclear, hydrogen, carbon capture and storage and domestic oil and gas production, to reduce our reliance on imported fossil fuels as part of a smooth energy transition?


9. What barriers are there to unlocking private investment to support the UK’s energy security, climate and environmental objectives?


10. How can the UK government assess and measure progress toward financing the UK’s energy security, climate and environmental objectives?

See previous responses on tracking, reporting and data quality and assurance. 

11. How can the UK best facilitate greater private investment into climate change adaptation and resilience activities?


Financing transition activities 

12. Are there barriers to the mobilisation of private investment into transition activities? If so, what are they and how might they be overcome?

Whilst there are a growing number of new and established FinTechs in the market with a focus on mobilising private investment into transition activities and projects, there remain several barriers to this operating at scale. Most critically, mobilisation of private investment at scale will require confidence and trust in the quality of the data, insight and monitoring of the net carbon reduction impact of specific projects and activities seeking investment. This confidence has been impacted by the growing wave of funds and projects being removed from ‘sustainability’ lists as a result of the continually evolving data and regulatory landscape for labelling, governance and supervision. To this end, it is imperative to understand the timeline for the UK taxonomy with context to commonality and differences with approaches taken across other global markets.  

These projects will also need to find new distribution models, in addition to traditional channels, to improve speed and agility to scale. New distribution models with technology at the centre such as those pioneered by peer to peer FinTech lenders (e.g Funding Circle during the financial crisis and Covid-19 pandemic) could be powerful in accelerating the transition. To this end, there are a growing number of new FinTechs focused on enabling new distribution models that bring greater confidence and trust to the quality of an investment by providing complete transparency at an individual project level of the carbon impact assessment and ongoing monitoring.

The current FCA Green FinTech Challenge 2021 includes a strong focus on learning from FinTech in areas that present fundamental challenges to accelerating the transition to Net Zero. Most notably, addressing the current data inconsistency, inconsistent measurement standards and tracking and improving accessibility to Green Finance. Learnings should be taken from FCA Green FinTech Challenge participants such as GreenGrowth, Civeq and CarbonLaces, among other FinTechs in the market, as a source of inspiration to shape the future target model for the UK. 

13. How can the UK become a leading hub in structuring and innovating on transition finance?

The UK can put into place the foundations required to become a leading global hub in structuring and innovating on transition finance. This can be achieved through increasing availability and accessibility to data and insight on the users, risks and growth opportunities alongside providing clarity on approaches to measuring, labelling, governing and supervising the design, delivery and scaling of new transition finance products and services in the market. Please see the response to question 5 for a number of examples of this. 

FinTechs can play a pivotal role in the development of new products, services, approaches to distribution, risk management and assessment. FinTechs can also  create superior platforms and approaches for accessing, using and enhancing the quality of data available for activities such as materiality risk assessment, improved risk modelling, decisioning and monitoring and the development of targeted financing solutions into high carbon intensive sectors (e.g. agriculture, construction, foods, fashion).

14. Is there a role for the UK government to support the development of transition finance markets in the UK and internationally?

As outlined in earlier question responses there are a number of roles that the UK government can play to support the development of transition finance markets in the UK and internationally. 

Importantly, as has been seen from the growth and impact of FinTech across all areas of financial service, it remains critical for the UK government to champion innovation, collaboration and collective action across the sector to accelerate R&D, learning and to scale new strategies and new entrant brands that bring competition and innovation. 

It is imperative to look beyond the established markets, brands and solutions for ways to rethink an accelerated transition. It is important to use learnings from the financial crisis and Covid-19 pandemic, where evidence shows the scalability and impact FinTech can have on scaling finance. For example, non-bank, FinTech based ‘alternative lenders’ delivered around 22% of Coronavirus Business Interruption Loans Scheme (CBILS) loans, more than double their pre-crisis market share - demonstrating their ability to deliver funding where it is needed.

One area of focus is to better define the roadmaps for critical high carbon sectors as part of UK governments’ industry strategies (agriculture, construction, energy) to enable targeted transition finance and innovation, that is anchored in longer term strategies to bring greater confidence and investment. A number of players in the market are leveraging ‘science based’ targets at a sector by sector level to set out clearer pathways with associated targets and monitoring. However, as referenced elsewhere, this is not currently happening under a standardised or recognised methodology meaning the measurement and data is inconsistent.

A number of Innovate Finance members, and participants in the Innovate Finance Net Zero Working Group such as Eigen Technologies and OakNorth, are already collaborating across the sector, in the UK and globally, to address these challenges.  

Case study: Eigen Technologies

Eigen Technologies is an AI platform using NLP technology to process documents to extract data across finance, insurance, law, manufacturing and professional services. In order to steer the financial system towards Net Zero, there needs to be full data transparency so that individuals and companies can understand the impact of climate change on their investments. Eigen’s NLP technology supports this by providing rigorous assessments of ESG reports and commitments. Their assessment of the qualitative data underpinning the financial system enables better ESG compliance and makes it easier to identify ‘greenwashing’. Such ESG reporting will support the shift in investment away from carbon intensive activities and towards low/zero-carbon and those businesses implementing science-based targets for transition to Net Zero.

Case study: OakNorth

The physical and transition risks posed by climate change greatly threaten the viability and credit worthiness of all businesses. As such, there is a need to revalue how balance sheets, income statements and operating models of businesses are assessed by lenders. OakNorth’s Climate Change Risk Framework, part of the ON Credit Intelligence suite, is a cloud software which provides insights to help US banks and financial institutions get ahead of both the risks and opportunities posed by climate change and the growing regulation in this area. The software provides portfolio and credit analysis to assess financial risk of climate change, and is driven by granular, sector-specific data. As a credit risk management tool, it looks at the impact of different scenarios of climate change, such as varying degrees of temperature rises (1.5, 2.4 and 2.8 degrees Celsius), across various sub sectors of the US economy and across various timeframes (5,10,20 and 30 years).

Developing natural capital markets 

15. How can the UK best support the mobilisation of private investment to natural capital assets?


16. How can the UK government best assess the progress and development of a natural capital investment market?

This is an emerging area for the market that will be shaped by the development and implementation of the TCND Framework, building on TCFD. As outlined in previous responses, learnings from the climate related open innovation FinTech challenges, led by industry and regulators, can be a valuable source of insight. The UK government may also consider the development of a Nesta-style challenge prize designed with specific focus on encouraging collaboration to assess the current market position and development roadmap. 

Ensuring broad access to green finance for local authorities, SMEs and retail customers

17. How can the UK financial sector support the delivery of the UK’s climate and environmental objectives at the local level, whilst also benefiting local growth and communities?


18. How can local authorities support the mobilisation of private and public investment to key sectors and technologies for the UK’s climate and environmental objectives, whilst also meeting local priorities? What barriers to this are there?

From a public investment perspective, the UK Government should revisit the principles and policies associated with access for SMEs to guarantee schemes, grants and public sector procurement processes with a specific focus on ensuring successful businesses have sufficient Net Zero action plans and commitments in place before awarding or approving. Applying a new lens to the decision making process could leverage the Social Value Act 2012, in spirit and principle, to appropriately and proportionately consider economic value alongside social and environmental well being. 

FinTech can also help public authorities to become Net Zero. C02 Analysis’ work with the NHS is a good example.  

Case study: CO2 Analysis - Supporting the NHS to become the world’s first Net Zero national health service

CO2 Analysis has used AI to analyse the coding of a large chunk of government and public sector purchasing, enabling the classification of goods and services and calculating the carbon footprint of what is being bought by public sector organisations. This enables them to quantify an organisation’s carbon footprint from the bottom up, starting with the individual goods and services, aggregating up to the individual supplier carbon footprints and finally a clear view of the overall organisational carbon footprint. 

CO2 Analysis trialled this with the NHS, analysing data for around 60 NHS trusts before releasing it as a commercial product. Following launch, it was used by the National Audit Office for its analysis of consumables purchases across all of NHS England, followed by the NHS Sustainability Development Unit for its Hot Spots analysis for all Trusts.

CO2 Analysis’ GreenInsight database now contains the largest global repository of carbon footprinted products and it continues to grow. Whatever an organisation is purchasing is most likely already on their system and easily identifiable to their AI - and if not, then it will be analysed and categorised to the granular level, then added to the overall information base.

19. What is the current state of capability within local authorities to attract investment, and how can it best be supported?

Please see other responses for insight into how FinTech can support local authorities, consumers and business to improve data, insight and understanding of the actions they can take, including attracting investment.

20. How can the UK financial sector support SMEs and retail customers to align with the UK’s climate and environmental objectives?

FinTech finance providers will lead the way in supporting SMEs to align with climate and environmental objectives.

In terms of SME finance, since the 2008 financial crash, FinTech lenders have grown into the main providers of finance for SMEs. By 2014 the market share was roughly even as between the large banks and other SME lenders (mainly digital providers including online challenger banks and lending platforms) and from 2015 to 2019 it was the other SME lenders who funded the growth in SME lending, as shown in the chart below:


The transformation of the SME lending environment has been achieved through innovation that has changed SME behaviours, created new sources of finance, improved processes, enhanced credit decisioning and enabled new business models to scale (such as Funding Circle and Funding Options). 

A number of industry and regulatory led actions have played a key role in shaping  this new environment, including the Business Finance Taskforce initiatives established post financial crisis (through the BBA) and the launch of Open Banking which helped create the foundations for the category defining innovation that has reshaped the market to be more competitive and responsive. See Funding Options case study in Question 21, below.  

FinTechs are also providing SMEs with the tools to measure emissions and develop Net Zero plans, cheaply, easily and quickly - such as C02 Analysis (see case study below).

In consumer retail markets, FinTechs are well advanced in providing information on emissions at point of sale and investment options for green savings and wealth management. These include retail and spending data solutions like CoGo and green investment platforms like Clim8 Invest - see case studies in question 21 below.  Importantly, both Clim8 Invest and CoGo demonstrate the need for a strong focus on user experience and educating consumers and small business, bringing context to complex data and insight, alongside providing convenient options. 

Consumer credit solutions and smart funding options for household transit are also being developed by FinTechs.

Case study: CO2 Analysis - tech-enabled SME carbon mapping and reduction tools

CO2 Analysis uses AI to help SMEs measure their emissions and become Net Zero, in a way that is affordable, saves money and increases their bottom line. AI analysis of an SME’s procurement and spend generates an emissions map. Generally the biggest spend correlates with emissions – so cutting emissions cuts costs. CO2 Analysis has mapped emissions and Net Zero commitments by many supply chain companies. This supplier data pack then enables SMEs to incorporate Net Zero into their procurement.

21. Is there a role for the UK government to facilitate broad access to green finance for local authorities, SMEs or retail customers? If so, what should these roles be?

The UK government should focus SME financial support deployed by the British Business Bank and tax incentives for SME investment (eg EIS and VCTs) to align with Net Zero goals, including linking taxpayer funded lending guarantees and VC investment to commitments and action on Net Zero and providing additional incentives (e.g. lower rates or greater investment) for transition investment.

As noted above, there are many easy-to-use Net Zero solutions for SMEs provided by FinTech services. The government could play a role in raising awareness of these and showing SMEs how affordable market solutions already exist.

Case studies:

Funding Options

Funding Options is an SME lending platform that has launched a Green Finance Initiative to drive sustainability into the SME lending market by connecting businesses to the funding they need to reach Net Zero. Approximately 25% of emissions in the UK are from SMEs so it is crucial that they are able to reach this goal. This transition requires capital and this can be harder to acquire for SMEs than larger companies. Funding Options’ Green Finance Marketplace aims to make these changes easier for SMEs by closing the funding gap. The initiative matches businesses which participate in renewable or sustainable activities, sell sustainable products or services or are working on green projects with lenders. Lenders are also required to show a green commitment: e.g. by providing a product specifically tailored to the purchase or leasing of green assets; a proposition developed to support green businesses; varied pricing rates for businesses with renewable or low/zero carbon activities, products or services; and/or a sustainability, ESG or green policy. The initiative provides access to green funding enabling SMEs to reach their Net Zero goals.


CoGo is an open banking platform that enables consumers to see the carbon impact of their purchases. The app connects to its customers’ bank accounts and calculates personalised carbon footprint in real-time based on spending habits and transactions. The carbon footprint calculator analyses banking data and matches each transaction to its industry. It then multiplies each transaction by the ‘emissions factor’ for each industry depending on how carbon intensive that industry is. The emissions factors are lower if renewable energy providers or second-hand retail vendors are used, and if you do not eat meat, for example. Seeing your carbon footprint, enables consumers to identify which activities are more carbon intensive and helps them make more environmentally-conscious choices. The app can also suggest businesses to support and suggests individual commitments to make positive impacts. CoGo has formed a partnership with NatWest who have integrated CoGo into the core NatWest banking app. This is being facilitated by open banking platform Tink who are providing the money management software that grants NatWest customers access to their climate insights from CoGo.

Clim8 Invest

Clim8 Invest is a platform for sustainable investment. They recognise that there is an increasing consumer demand to tackle climate change and that investing platforms can be a force for good by allowing consumers to invest in sustainable projects and make a positive impact. Their platform offers investment exclusively into targeted portfolios of companies who are combating climate change, focusing on sectors including clean energy, clean technology, clean water, sustainable food, smart mobility and the circular economy. This enables consumers to invest sustainably and take control of the impact their money makes; all portfolios are aligned with the UN Paris Climate Agreement benchmarks.

CO2 Analysis

Please refer to the two CO2 Analysis case studies - tech-enabled SME carbon mapping and reduction tools, and supporting the NHS to become the world’s first Net Zero national health service - above.

High integrity voluntary markets for carbon and other ecosystem services

22. How can the UK best support the development of high integrity voluntary markets for carbon and other ecosystem service markets?

Innovate Finance thinks that there are five key drivers that will better support the development of high integrity voluntary markets for carbon and other ecosystem service markets:

  • Monitor and manage greenwashing to ensure integrity in markets;
  • Agree standards to be applied that are comparable across companies, and monitor reporting; 
  • Assurance standards should be enhanced;
  • Assurance providers should be assessed regularly regarding the quality of assurance; and
  • Technology should be deployed to robustly assess underlying assets used to secure bond offerings for compliance to standards.

23. How can we ensure that these markets encourage robust action on the UK’s climate and environmental goals, and appropriately scale up finance flows to support these?


24. How should the UK harness the economic opportunities associated with high integrity growth in voluntary carbon markets and ecosystem services markets?


25. How can UK environmental and economic regulators increase demand for high quality, accredited ecosystems services?

Voluntary carbon markets and ecosystems services have an integral part to play in supporting the transition to Net Zero by directing private finance towards climate-related risk mitigation and nature-based solutions. Supply-side transparency and assurance is critical in order to build consumer trust and to create a virtuous circle on the demand-side. 

In a world-leading green finance economy, supply-side transparency will be underpinned by data and distributed ledger technology. As such, the government and regulators should work collaboratively to accelerate the delivery timetable to move from open banking towards open data, which could drive exponential innovation. Additionally, regulators should continue to support – through sandboxes and scaleboxes – DLT-based assurance solutions. 

Our members’ experience points to a disconnect on the demand side between intention and action. While consumers wish to make more sustainable choices and lower their carbon emissions, there is a lack of information about their own impact and a lack of convenient, actionable advice on how to make more sustainable choices. 

Recognising that consumer behaviour can be changed through education, and targeted nudges and incentives at the point of interaction with financial services and other firms, the FinTech ecosystem has created solutions which overcome the barriers that cause the above described disconnect. For example, Innovate Finance member, Earthchain has partnered with Lloyd’s Banking Group (LBG):

Earthchain is a climate FinTech based in Leeds, with a platform capable of estimating CO2 emissions using retail transaction data. Earthchain was selected to join LBG’s Launch 2022 programme for FinTech innovation. Together with LBG, Earthchain is developing a proof of concept to measure the efficacy of Carbon Intelligence delivered by a bank’s digital channels to educate consumers and motivate them to take action to lower their personal carbon footprints. Earthchain’s solution also includes a rigorous approach to carbon offsetting – using a blockchain-based Carbon Ledger to tokenise and track Gold Standard certified carbon offsets and deliver them by the gram instead of by the tonne without compromising the integrity of the carbon market. This mechanism could potentially be harnessed to fund UK emissions reduction projects (e.g. social housing retrofit) with sufficient support from local and national government, and through the participation of retailers and banks to provide access channels at the point of purchase or in-app. FinTech has the power to lower the barriers to taking effective climate action, and to drive demand for lower impact products and services. 

In a similar vein, Cogo supports major UK banks, including Natwest and Santander, to integrate carbon tracking in their respective banking apps. And Tred, a FinTech start up from Leeds, has centred its banking app around sustainability and has garnered significant traction. 

Greening the financial system

26. What are the key characteristics of a Net Zero-aligned Financial Centre? How would these characteristics apply to a typical UK-based:

a. Bank
b. Insurer
c. Asset manager
d. Regulated asset owner
e. Listed company
f. Large private company
g. Small and medium size enterprise (SME)
h. Retail investor
i. Professional services firm
j. or any other relevant industry participant

Overall, a Net Zero-aligned financial centre is one where:

  • all market participants and industry bodies are acting as quickly as possible to achieve science based Net Zero targets across their scope 1-3 emissions
  • every asset in their portfolios and balance sheets is aligned to the relevant Net Zero transition pathway
  • investment in Net Zero solutions is incentivised and enabled
  • support is given to others to deliver Net Zero. 

In other words, it is a centre where in every entity, capital, customer services and products, and activity is aligned to Net Zero. This should be achieved in ways that enable a fair and equitable transition, across global regions, communities, income groups and households, and small firms. This will be technology enabled.

Every one of the following sectors will:

  • have technology enabled Net Zero emissions and action reporting (whether across a bank portfolio or as an individual SME); 
  • all financial products linked to Net Zero and technology enabled, e.g. pricing and provision of insurance and debt finance linked to Net Zero progress in the individual business
  • most finance will be provided by technology platforms, able to target and assess specific customer pathways and progress, with technology based assurance and verification.

The development of a Net Zero financial centre will take place in tandem with a radical transformation of financial services and systems already underway - including provisions of finance via integrated application platforms (‘super apps’), deployment of advanced artificial intelligence and application of distributed ledger technology (e.g. blockchain) across capital markets infrastructure (including smart contracts and DLT records in private and public capital markets) and transformation of payments systems by stablecoin and (programmable) Central Bank Digital Currencies.  

At the moment this technological transformation and Net Zero transformation tends to be viewed separately. The two need to be considered as a whole. The technology - including blockchain - needs to have its own rapid Net Zero pathway and thinking about Green Finance needs to factor in what finance will look like in the future - not just the existing financial systems and infrastructure. This also means that as regulation of new financial services products is developed (like cryptoassets), Net Zero should be incorporated into the regulatory regime.

27. What market barriers are there to the integration of environmental-related factors into financial decision-making?

See previous questions: key barriers include data quality, assurance and data availability. 

28. What should the role of the UK government or regulators be to support the greening of the financial system? How could they go further?

FinTech is already providing and developing many Net Zero solutions in consumer, business markets and financial systems. Where there are no solutions at present, Government can and should work with FinTechs to develop new solutions, which may then be scalable beyond the UK.

Please also see earlier question responses on the regulatory environment.

29. How can the UK government measure progress towards greening the financial system?

Our previous answers provide details of the main elements that should be measured towards progress. In addition we would suggest metrics based on the following areas:

  • the proportion of total capital in UK markets and institutions deployed to Net Zero investment and Net Zero aligned entities
  • percentage of total market across all financial instruments, and by category, reporting on emissions
  • this should include measurement of the extent to which the portfolio activities supported by every UK based financial sector (including asset management, banking, primary and secondary markets, mortgage lending, SME finance, corporate bonds, retail and commercial insurance, cryptoassets etc) are each aligned to Net Zero. 

Ultimate progress will be when entire portfolios are aligned to Net Zero - new funding is only being invested in firms that are actioning a Net Zero science based plan in parallel with transitioning existing finance over time and in balance with dependent sustainability impacts.

Providing the market with the right data

30. What steps can the UK government take to support a robust investment data ecosystem to attract green finance flows?

Achieving Net Zero means linking finance to data (tracking emissions and progress on Net Zero transition). The UK has led the development of climate data and modelling and risk data. Increasingly, access to real time data across client’s scope 1-3 emissions will be critical to providing services and products. The UK can facilitate this with action to open up data across the economy. For global markets, this will need to be encouraged through trade agreements and with a UK data protection regime that ensures continued cross border transfer and storage of data.


Achieving Net Zero means linking finance to data (tracking emissions and progress on Net Zero transition). The UK has led the development of climate data and modelling and risk data. Increasingly, access to real time data across client’s scope 1-3 emissions will be critical to providing services and products.


A robust investment data ecosystem requires:

  • a synthetic data market to enable development of new products. The FCA’s call for input on this topic is important and should lead to action to stimulate a commercial market in providing synthetic data sets.
  • access to data: outside of a few sectors, data remains a proprietary asset with no requirements to open access to others. Opening access to all public data is a crucial first step including HMRC data (subject to consent of the entity whose data is held by the public body) and extending this to commercially held data – with a requirement to publish meta data ensuring transparency of what data is held by whom) and a requirement to provide reasonable access, on fair commercial terms, for any service provider requesting data (with consent of the data subject). This requires a comprehensive smart data programme and rights.
  • an internationally recognised system of data protection and removal of data localisation requirements through trade agreements. Any reform of GDPR must maintain the UK’s position as a jurisdiction recognised as protecting data, enabling cross order data transfers and management. In recent UK trade agreements such as the Singapore digital trade agreement, the UK has negotiated agreements on data localisation to prevent barriers to trade and extending these to other trade agreements would be beneficial.

31. Are Scope 3 (supply chain) emissions data important for investors to assess and manage climate-related risks and opportunities?

Yes. Scope 3 is a fundamental part of assessing emissions. This is the most difficult aspect for measurement and any actions to increase data would be most valuable.

Comparability is problematic as every entity uses its own methodology to assess Scope 3 emissions at this stage. Progress would be welcome on standardisation and developing the ability to compare between institutions.

32. Is there a role for the UK government to support businesses (of different types and sizes) to make good quality Scope 3 emissions disclosures (including SMEs in the value chain of disclosing entities)? If so, what should this be?

To a certain extent this can and will be achieved by disclosure requirements on banks, large corporates and asset managers – and the disclosure requirements will work through the portfolio and supply chains to SMEs. The UK should ensure disclosure requirements of financial institutions extend to reporting on SME lending portfolios

The UK Government could help by supporting education, access to measurement, awareness of market solutions available already (especially low cost FinTech solutions), and finance for transition. In particular, the UK Government could consider aligning all its SME finance interventions (eg via the British Business Bank) to Net Zero and providing additional mechanisms to support Net Zero transition investment in SMEs.

Case study: CO2 Analysis

Please refer to the two CO2 Analysis case studies - tech-enabled SME carbon mapping and reduction tools, and supporting the NHS to become the world’s first Net Zero national health service - above

Leading internationally

33. Up to 2030, how can the UK government best support the global transition to a Net Zero, nature-positive financial system that is both inclusive and resilient?


34. How can the UK government increase the mobilisation of public and private investment to achieve 2030 climate and nature targets in emerging and developing economies?


35. How should the UK government assess and measure progress towards the transition of the global financial system and mobilisation of finance for global climate and nature goals?

Please see earlier responses on data quality, usage, consistency and accessibility. The key areas of focus for UK government should be to:

  • promote global data standards
  • support inter-operability and cross border transfer of data
  • adopt a ‘learn by doing’ approach to FinTech

Building on the Glasgow Leaders’ Declaration on Forests and Land Use

36. How can governments work with the financial sector to help align the global financial system with the Glasgow Leaders’ Declaration goal of reversing forest loss and degradation by 2030?


37. What support is needed to help firms to factor AFOLU related emissions and potential risks into their strategic planning?


Supporting an inclusive transition in emerging and developing economies

38. What are the unique challenges for emerging and developing economies in meeting the requirements of the transition to a Net Zero and nature-positive global financial system, and how can the UK best provide support to overcome these?

N/A.Mobilising finance in emerging and developing economies using green bonds

39. Considering the key market incentives and barriers, how can the UK best support an increase in high quality, green bond issuances for emerging and developing economies?

The UK Government and regulators should draw learnings, as they emerge, from BIS Innovation’s Project Genesis, where blockchain, smart contracts and other related technologies will be used for the tracking, delivery and transfer of so-called Mitigation Outcome Interests – de facto carbon credits recognised under national verification mechanisms compliant with the Paris Agreement – attached to a bond.

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