Lord Mayor Of London Says Green Finance Needs 'more Momentum And New Instruments Like Transition Bond'

Lord Mayor of London says Green Finance needs 'more momentum and new instruments like transition bond'

By Binsal Abdulkader ABU DHABI, (Pakistan Point News - 26th Jan, 2020) Green Finance has not gained enough momentum globally and financial markets have to introduce new instruments such as transition bonds for attracting more funds to this sector to curb climate change, a UK official told Emirates news Agency.

"We need much more momentum in Green Financing. Consumers are aware of it. I think the population [across the globe] begins to understand how critical it is, but we need leaders and governments to recognise this as well," said William Russell, the Lord Mayor of the City of London.

Green Finance aims to increase level of financial flows from banking, micro-credit, insurance and investment from the public, private and not-for-profit sectors to sustainable development priorities, according to the United Nations Environment Programme, UNEP.

Russell said the UK government recognises the importance of Green Financing. "But we can always do more. We need more countries to issue green bonds [fixed-income financial instruments that fund environmental improvements or projects]. The UK Government will issue more green bonds this year," he explained.

However, green bonds are not enough. "We need more financial instruments such as transition bonds to attract more funds to green finance."

Transition bond is where a company that wants to be greener launches a bond to help with that transition, he explained, adding that "green investors" will invest in transition bonds if they know that it is going to make that company more sustainable.

The idea of transition bond is still in its infancy, he believes.

"There are more such opportunities ... financial markets are adaptable [to accommodate such new instruments]," stressed the head of the City of London Corporation, a position separate from the directly elected Mayor of London.

Elected annually, the Lord Mayor of the City of London is an international ambassador for the UK's financial and professional services sector, without an administrative role.

Asked whether the current turbulence in global economy will affect fund flows to green finance, he said, "The green bonds are still attractive because you get very good returns on investments. If interest rates are low as they are [globally], you get 7 to 10 percent returns [from green bonds].

"If you invest in green infrastructure; you are going to get good returns."

About the UK-UAE cooperation in sustainability projects, Lord Mayor said a UK-Government project funded by Masdar, Abu Dhabi-based global company in renewable energy and sustainable urban development, was helping to install charging points for electric cars across the UK.

"This year will witness massive launch of electric cars. Therefore, we are going to move very quickly."

Otherwise, he said, there would be too many electric cars in the market without sufficient charging points. The Masdar-funded project will make a big momentum and "hopefully we will make it," he added.

"We have [UK and UAE] many other investment partnerships in fin-tech, green finance etc."

Talking about London’s sustainability initiatives, he said, "We have something called 'Beach Street,’ a tunnel that will become emission free this year. Only zero-emission vehicles and pedestrians are able to use the street and that applies at any time of day or night."

The city will also completely ban idling cars. "People leave their cars with engine on for no reason at all. Maybe they want to keep warm. We are going to ban idling cars to stop air pollution."

As part of the campaign against plastic, some London businesses will become totally plastic free soon. "It is happening [everywhere]. In Mubadala [for example] you cannot bring in single-use plastic. It is the attitude we need to adopt against the climate change," he said.