B4NZ at COP28: Our policy priorities
COP28 arrives amid significant uncertainty regarding the environmental agenda in the UK. The recent reversal of the Government’s commitment to green policies has undermined the UK’s position as a leader in tackling climate change. This is not only concerning for its immediate carbon footprint but also for the potential long-term damage to confidence among investors, businesses, and households in the urgency of climate action. Its position could also lead other nations to question the necessity of taking similar measures. Therefore, it is crucial for businesses, the third sector, and civil society to seize the opportunity presented by COP28 to showcase support for sustainable initiatives and work towards restoring the UK’s reputation as a green advocate.
The private sector is poised to play a crucial role at COP28 by collaborating with governments to drive climate action. Through partnerships, financial commitments, and advocating for supportive policies, private companies can amplify the impact of climate initiatives. This collaborative approach, combining the strengths of both sectors, is essential for achieving meaningful progress in addressing climate challenges on a global scale.
Bankers for Net Zero Policy Priorities at COP28
Bankers for Net Zero will be at COP28 to demonstrate UK leadership on the global stage and continue to champion the role of banks, business, policymakers and regulators to play their part in the transition to net zero. We will go to COP28 with the following policy priorities.
Helping SMEs transition to net zero
Standardise SME reporting for SMEs
Existing policy frameworks are designed for large companies, not small ones. The focus on standardising reporting for SMEs extends beyond their individual growth, aiming to strengthen ESG reporting throughout the supply chain.
We are calling for the establishment of a proportionate minimum reporting baseline specifically designed to empower SMEs. This initiative aims to streamline sustainability reporting for smaller entities, ensuring a low-effort, low-friction approach that aligns with their operational scale.
Given SMEs often form integral parts of larger supply chains, it is important to facilitate collaboration between larger companies and their SME counterparts. To achieve this, we recommend exploring mechanisms for SMEs to share data in ways that not only support robust ESG reporting but also enhance SMEs’ accessibility to transition finance. Open banking standards present a promising avenue in this regard, offering a transparent and efficient means of sharing relevant data.
Provide incentives to encourage SMEs to transition to net zero
There needs to be incentives in place to engage SMEs in the transition to next zero. This could include a mix of tax incentives, subsidies, and low-cost finance to support SME decarbonisation. Additionally, governments’ procurement budgets can be strategically and actively utilized to incentivize supply chain decarbonization.
Support SMEs in developing countries
Governments and the private sector can collaboratively champion the decarbonisation of SMEs in developing countries by providing financial support mechanism such grants, low-interest loans, and subsidies to alleviate the financial burden of adopting new green technologies. Simultaneously, capacity building and training initiatives can empower SMEs with the knowledge and skills necessary for implementing sustainable practices. Policymakers can contribute by implementing clear regulations that incentivize environmentally friendly practices and provide guidelines for emission reduction targets. The development of sustainable infrastructure, certification programs, and international collaboration further strengthens the ecosystem, creating a conducive environment for SMEs in developing countries to successfully embark on their decarbonization journey.
Decarbonising the built environment
Policy clarity and fiscal incentives
One of the key issues within domestic retrofit has been the lack of consistent policy direction over time. At present, effective financial support for decarbonisation is not present for the majority of homes.
Ensuring policy clarity around the retrofit decarbonization pathway is vital, actively involving a mix of incentives such as a lower stamp duty incentive for more efficient homes, a building renovation passport, Enhanced Capital Allowances for retrofitting investments, and zero VAT on low and zero carbon products.
Fiscal incentives play a pivotal role in encouraging sustainable practices among property owners and can actively motivate able-to-pay owner-occupiers and private landlords to invest in energy-efficient solutions. Governments should prioritize investments in decarbonizing social housing and public sector buildings. By using these projects as a catalyst, there is potential to stimulate the wider market and drive down overall costs for sustainable practices.
The shortage of reliable data on the performance of energy efficiency measures has been highlighted as a barrier to change. Upfront finance from banks to pay for insulation or other energy savings measures needs to be provided on the assurance that those savings will materialise. Currently, Energy Performance Certificates (EPCs) are the main source of data on building energy efficiency in the UK, as well as in many other countries, but these certificates are not reliable to measure real world energy performance. Governments should explore accurate measurement tools that allow financial institutions to track the value of their green loans and encourage consumers to switch to greener alternatives.
Incentivise investment in regenerative agriculture
Governments should not only set out a clear plan and timeline for phasing down the use of fossil fuel-based agrichemicals but also prioritize the development and implementation of sustainable alternatives. This includes investing in research and innovation to promote eco-friendly agricultural practices and the use of organic or bio-based fertilizers and pesticides. By fostering a supportive regulatory environment and providing incentives for the adoption of sustainable agricultural methods, governments can encourage farmers to transition away from fossil fuel-dependent agrichemicals.
Moreover, governments should prioritize developing resilient food systems by actively supporting farmers in adopting environmentally friendly practices.
Transform food systems
Contributing to one-third of global greenhouse gas (GHG) emissions, food systems cannot be phased out in the same manner as fossil fuels. However, there is an opportunity to transform these systems to achieve net-zero emissions, restore nature, and enhance resilience.
Governments can actively expedite the shift to resilient, climate-friendly food production by actively nurturing a supportive regulatory environment and offering incentives for sustainable agriculture.
Governments must also use public sector food procurement standards to create demand for low-emission farming in food supply chains and clarify how public finance will be used to attract and complement private finance.
Elena Pérez Celis,
Head of Policy & Public Affairs