How are we going to get there?
The UK Government has announced that the UK will become the world’s first Net Zero-aligned Financial Centre. For this to happen all UK banks must have a transition plan in place, by 2023, that will outline how they will decarbonise and reach the net zero target.
The Government have plans to oversee the financial sector, to make sure that the are doing everything they can to reach net zero.
As these banks begin to put together their transitional plans, the UK Government has announced it will take measures towards publishing these plans for full transparency. By 2023, the Government hopes that it will have increased the adoption of transition plans.
To help to end greenwashing by introducing a high-level Transition Plan Taskforce that will regulate transition plans to make sure they are up to a ‘gold standard’.
What are Transition plans?
Transition plans are the plans an organisation creates in order to help them to transition to a more sustainable way of working. These plans are put in place to allow a bank, building society or money lender to start working in a way that is part of a low carbon economy, to be in line with the UK Government’s 2050 net zero target.
For a transition plan to be successful it must contain three main parts, the first being their targets set for mitigating the climate risk, this includes how they will reduce the amount of greenhouse gases they emit. Secondly, they must set out milestones in which they need to reach. Lastly the plan needs to outline which actionable steps they are going to take in order to reach the targets that they have set.
Why are these plans important?
With these plans in place, banks and building societies will have the steps they need to become more sustainable, and to reduce their carbon footprint. Many banks have made pledges to become more sustainable and get in line with the UK Government’s 2050 net zero target and these plans mean they have a way in which they can do so.
There is nothing stopping a bank or building society from investing in carbon intensive projects, such as fossil fuels. However, as the UK Government moves towards making the publication of these transition plans mandatory, there is hope that due to the demand of those using our high street banks for greener and more sustainable investment. These banks will begin to shy away from investing in unsustainable projects.