Unlocking green growth: Why the UK is the smart bet for sustainable finance

This is a unique gathering, bringing together financial institutions, climate scientists, academics, regulators and innovators to tackle one of the most pressing challenges of our time: climate change and its impact on financial systems.

It has long been clear that climate change is not just an environmental issue, but a financial one too. It is almost exactly 10 years since Mark Carney, in his role as Governor of the Bank of England and Chair of the Financial Stability Board, gave his ‘tragedy of the horizon’ speech.

The risks are real, and they are growing. From rising insurance costs due to extreme weather events, to shifts in asset valuations and lending criteria, the effects of climate change are now being felt in real time across the financial sector.

Yet amongst all the challenges lies the chance to innovate, to lead, and to build resilient systems that thrive not in spite of change, but because of it.

Today I want to talk about the landscape we’re operating in, and tell you some of what we’ve been doing and what we are planning in this space – and then I have a request, something I want you to do, which will help us all.

The landscape we’re operating in

Leading climate research is abundantly clear that the physical risks of climate change, both acute and chronic, are getting more frequent, more severe, and are costing more and more to deal with.

And make no mistake - many of these risks fall well within the current planning horizons for investors, insurers, lenders and beyond. Firms must be ready to tackle the climate shocks hitting us today, while building resilience to withstand even greater ones tomorrow.

The owners of capital, such as pension funds, are still very much focused on this aspect of sustainability.

And actuaries are moving beyond technical modelling to advocate for realistic risk messaging and policy reform, developing frameworks like Planetary Solvency, which assess the stability of nature as a foundation for economic and societal resilience.

CFRF has been helping financial firms think about how they respond to the physical impacts of climate change – that is, the changes in frequency and intensity of weather events like storms, fires, and droughts.

Last year, a Working Group highlighted that even a 1.5-degree rise in global temperatures is a scenario that demands adaptation in business models, planning, and investment.

That’s not an adaptation to a ‘worst-case’ outcome, but rather to a baseline scenario many are preparing for.

What does that mean?  It means we need new information, new data, and new ways of thinking.  There will be new opportunities, new risks, new winners and new losers.

Of course, we also know that not all regions are aligned in their approach to climate risk. Some jurisdictions are moving faster than others, and global coordination remains a work in progress.

Divergent approaches to net-zero and related climate policies have a knock-on impact across the world as businesses navigate a far more complex landscape.

But this doesn’t alter the fact that a proper understanding of how climate risks and opportunities can be financially material is an essential aspect of responsible risk management.

This isn’t a radical approach; it’s entirely consistent with historically conventional attitudes to financial regulation, and zeroes in on what truly matters to investors.

And changes of emphasis in the broader debate doesn’t affect this equation. Whether energy security and adaptation are now referred to as much as net-zero ambitions makes little difference to disclosure standards based on financial materiality.

Climate change affects credit risk, insurance risks, market stability, operational resilience, and a firm’s customers, and so a system-wide response is required. 

Qualities of the CFRF

That’s why forums like this are so important. The CFRF is an exemplar of how the market can come together, bringing diverse voices to find practical, actionable solutions, addressing common challenges which impact us all in different ways.

Just to pick one example, the CFRF will be setting up a new working group to deliver a suite of transition finance metrics in line with the recommendations made by the Transition Finance Market Review[2]. 

Global momentum

We’re also seeing momentum globally. During my time as Chair of IOSCO[3], we endorsed the ISSB standards, helping to establish a consistent and credible global baseline for corporate reporting.  

Asia is moving quickly in this space. Hong Kong, Singapore and Japan, for example, are rapidly building leadership in green and transition finance. The largest IPO in the world this year was a Chinese EV battery company, which raised over US$5bn.

China’s green bond market continues to expand, with over US$555bn issued by the end of 2024 – and in April this year, China issued its first-ever overseas Renminbi-denominated sovereign green bond on the London Stock Exchange.

Other markets are also stepping up. Brazil, Nigeria, and Malaysia are among the 36 jurisdictions now adopting the ISSB standards, helping to establish a global baseline for sustainability disclosures.

In Latin America, Chile will mandate ISSB-aligned reporting from 2026, while in Africa, countries like Kenya and Ghana are finalising their frameworks.

This global convergence is not just regulatory - it’s strategic; perceived as essential for attracting capital, and meeting investor expectations that companies identify and disclose sustainability risks.

And from a UK perspective, the Government has made clear that it wants to stimulate billions of pounds a year of private investment to deliver its clean energy superpower mission, and make the UK the 'sustainable finance capital of the world'.

As part of this growth, the government has emphasised the importance of proportionate transition plan reporting as a pre-condition for a flourishing sustainable and transition finance market.

What the FCA is doing

Our outlook at the FCA is both domestic and international, and we’re working across multiple fronts to ensure that our frameworks are fit for purpose in this changing world.

Prospectus disclosures

As we transition to a low-emissions economy, financial markets want more consistent and comparable information on how companies plan to adapt their business models, their operations and their products and services.

And to repeat, they want this information because it’s financially material for decision-making. And climate disclosures deliver this information.

So, as part of the new Public Offers and Admissions to Trading Regime[4] – basically the framework governing how funds are raised through primary capital markets - we've included a new climate disclosure rule as well as measures to improve transparency about green bonds and sustainability-linked bonds.

The new rule will allow companies to publish information under a new category of Protected Forward-Looking Statements.

Companies will be able to describe their transition plans, net-zero targets, and other long-term ambitions with far greater confidence because the threshold for legal liability will be centred on whether the issuer was reckless or dishonest, as opposed to simply negligent.

This shift should support better investor decision-making, which is so heavily dependent on the availability of the type of consistent and credible projections which lie at the heart of climate disclosures.

Integrating ISSB

We’ll also be considering how to adopt the ISSB standards into our rules. The Government has now closed its consultation on endorsing the ISSB Standards to create new UK Sustainability Reporting Standards.

So we will soon consult on how we will update our rules to apply these standards to listed companies. Ultimately, this work supports the integrity of sustainable finance and strengthens the UK’s role in shaping global standards.

Technical assistance programme

In that vein, we’ll shortly be sending a team to spend some time with our regulatory partners in two south-east Asian countries to support their development of sustainable finance.

ESG data and ratings

And, finally, ESG ratings providers will be coming within our regulatory perimeter. Ratings are increasingly used by investors, but the market remains fragmented and can lack transparency.

We will consult on a framework to ensure that ESG ratings are robust, reliable, and aligned with investor needs.

Supporting innovation

Beyond these technical areas, we’re also thinking about the broader role of regulation in supporting innovation. We want to ensure that we enable creativity and help market-led solutions emerge.

That is why we have initiated a pilot, in partnership with the Prudential Regulation Authority (PRA)[5] and the Green Finance Institute (GFI)[6], to identify potential barriers to scaling finance for climate solutions, engaging with industry and stakeholders in government and business.

Conclusion

Climate change is reshaping the world and the financial landscape. Through collaboration, innovation, and smart regulation, we can build a financial system that is resilient and fit for the future.

The good news is that the UK is uniquely well-placed to lead this global effort.

We are home to the second-largest asset management centre in the world. We host the biggest commercial and speciality risk market. And we possess deep expertise in debt issuance.

But our potential goes beyond what we already have. We can position the UK as the world’s sustainable finance centre, which is consistent with the ‘supporting growth’ pillar of the FCA’s 5-year strategy[7] published in March.

So here’s my ask of you: seek out the opportunities. Bring us your ideas, your challenges, and your ambition – and let us help you turn them into impact.

At the FCA, we’re committed to clear, proportionate rules, global cooperation, and fostering innovation. We’re on the pitch – but we can’t play this game alone.