The UK’s financial institutions haved put money into clean energy projects at a faster rates than anywhere else, according to a new report.

The study, published on Tuesday by the City of London Corporation and Climate Policy Initiative, showed UK financial institutions tripling their investment into clean-energy projects in one year, to $2.3 billon, in 2023.

The report revealed that the rate of increase of investments by 126 UK financial firms was the fastest across the five global financial centres in the study, which included the US, France, Germany, and Japan.

All five countries saw an average increase of 59 per cent in investment in clean energy project in 2023, compared to the previous year.

“We should celebrate the progress financial services institutions made across major global financial centres on the road to net zero,” said Chris Hayward, policy chairman at the City of London Corporation.

“Organisations continue to see the opportunities a net-zero economy can offer, across a number of areas of sustainable finance including transition and nature finance.

“It is fantastic to see that UK financial firms continue to lead the way on the implementation of climate commitments. Over the past 10 years, the UK’s financial services sector has played a critical role in supporting the transition to net zero globally,” he added.

Almost all the financial services firms in the study have formal climate commitments in place and the focus is now shifting from commitment to implementation.

‘Significant gaps’

The report’s findings also revealed that by the end of 2023, half of the UK’s financial institutions being tracked as part of the study had set targets that covered more than 70 per cent of their invested assets.

In comparison, half of institutions tracked in France had set targets covering 60 per cent of their portfolios, while half the institutions in US and Japan had targets with 50 per cent portfolio coverage.

“This latest analysis based on the Climate Policy Initiative’s Net Zero Finance Tracker highlights welcome progress by financial institutions,” said Dharshan Wignarajah, UK director of Climate Policy Initiative.

“This is encouraging and reflects how good policy and leadership, like those exemplified by the United Kingdom, can produce real impact on the ground.

“But the research also reveals that significant gaps remain, especially considering many financial institutions in the UK and elsewhere remain outside the leading financial alliances for net zero and have not made any commitments.”

The report’s findings will be discussed at the third annual Net Zero Delivery Summit on Tuesday, which brings together global financial and corporate leaders with sustainability experts to evaluate the progress made at previous Cops and how to turn words into actions ahead of the Cop29 in Azerbaijan.

Updated: June 03, 2024, 9:50 PM